The Most Crowded Trade in Bonds Could Be Crumbling
- Global government debt due in decade or more swells by record
- Duration buildup creates vulnerability to interest-rate shock
Should Investors Treat Treasuries and Gilts with Caution?
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The hottest craze in fixed income is at risk of overheating.
A headlong rush into higher-yielding, long-term bonds in recent years has created one of the most crowded trades in financial markets. Investors seeking relief from central banks’ zero-interest-rate policies have poured into government debt due in a decade or more, swelling the amount worldwide by a record $733 billion this year. It’s more than doubled since 2009 to about $6 trillion, data compiled by Bloomberg and Bank of America Corp. show.