Ultra-Low Bond Yields a ‘Double-Edged Sword,’ Wells Fargo Says

Plunging yields on fixed-income debt are forcing some investors to “reach well beyond their normal investment ‘comfort zone,’” by taking on more credit risk or buying longer-duration debt, according to Wells Fargo & Co.

“Ultra-low yields can become very counterproductive if generally risk averse investors are forced to take on a lot more risk than they normally do, just to get enough yield to ‘make ends meet,’” Richard Gordon, managing director and fixed-income market strategist at Wells Fargo wrote in an Aug. 24 report titled “The Doubled Edged Sword of Ultra-Low Yields.”