Wednesday, August 17, 2016

Is The "Reach For Yield" 
Turning Into a "Flight To Quality"?
Article highlights how up to now zero/negative interest rates around the world have forced investors to seek yield through a shift to longer duration &/or lower credit quality .. But now UBS is asking whether the "reach for yield" trade has turned into a "flight to quality" trade as investors take a more defensive posture across the credit spectrum. A review of global institutional and retail fund flows seems to suggest that the "reach for yield" trade is waning with more money flowing into investment grade & crossover credits & out of high yield .. commentary: "In today's rigged markets it's often difficult to truly understand the motivations of massive pools of pension/insurance capital. After all, its difficult to understand how "lending" money to someone for 10 years and then paying them for the honor of providing the loan makes any sense. That being said, it's hard to imagine how a rotation out of HY can be viewed as anything but negative for global economies as high yield is often the first market to break and typically leads equities lower."
LINK HERE to the article & commentary

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