Credit Markets Are Eerily Calm in a World of Upheaval
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Price moves in the global credit market are so calm that some money managers are wondering whether a relentless rally in corporate bonds is becoming a red flag.
A handful, including those at Franklin Templeton Investment Management and AXA Investment Managers, are getting more cautious about corporate bonds. With investment-grade spreads — the premium in yield that corporates pay over risk-free government bonds — at the tightest in almost two decades, they’ve been reducing allocation to the asset class in favor of sovereign debt and cash, believing that the meager reward isn’t worth the risks.