jeudi 22 janvier 2015

What Draghi’s Bond Buying in Europe Means for U.S. Debt Markets

"The European Central Bank’s resolve to funnel more than a trillion dollars into the region’s capital markets may be a boon for borrowers across the Atlantic."

ECB President Mario Draghi unveiled a bond-purchase program to ward off signs of deflation threatening to engulf the euro area similar to the exercise undertaken by the Federal Reserve six years ago.

The infusion aimed at boosting asset prices may prompt investors to shift money into U.S. corporate bonds, which offer the most yield relative to company debt in Europe in a decade. 

“Yield differential in U.S. and Europe is significant now and this ECB move will further help European corporates rally,” Scott Service, a Boston-based money manager who helps oversee $39 billion in Loomis Sayles & Co.’s global bond strategies, said in a telephone interview. “This could cause some global investors to favor the U.S. market over Europe.”

Read more: The average yield on U.S. investment-grade bonds exceeds European high-grade debentures by 1.9 percentage points, Bank of America Merrill Lynch index data show.

Bloomberg Viadeo: Larry Fink: The Market Should Not Doubt Draghi

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