Pimco, Allspring Bet on Mortgage Bonds That Look Cheaper Than Corporate Debt
- High-grade credit spreads are tight even amid abundant risks
- Mortgage bonds look attractive in this environment: Goldman
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Big bond investors including Pacific Investment Management Co. and Allspring Global Investments are piling into mortgage bonds now, betting that the relatively cheap securities will perform better than comparatively pricey corporate bonds as inflation and tariffs potentially weigh on company profits.
High-grade corporate bond investors aren’t getting paid a lot to take credit risk at the moment. US company bonds pay yields averaging about 0.78 percentage point more than comparable Treasuries as of Thursday, according to Bloomberg index data. That’s close to the lowest risk premium in decades.