Bond Outlook [by bridport & cie, October 21st 2009]
Our recommendation this week is merely a reiteration of last week’s: there is still mileage in lower credits, but some form of insurance is required to hedge against the risk of inflation, together with a certain readiness to change tack if and when curve steepening begins in earnest and spreads start widening. The risk of inflation is now broadly recognised, both in terms of comments published by fund managers and also by the behaviour of financial markets (demand for “out of the money” interest rate options and the price of TIPS). |
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