, Columnist
The Worldwide Deficit of High-Quality Debt
There's strong demand for high-quality sovereign debt and not enough supply, which means yields will stay low for a long time.
This is junk, too.
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Expectations of economists and pundits notwithstanding, interest rates are falling around the world. Despite the end of quantitative easing in the U.S., and the possibility that the Federal Reserve will raise rates later this year, the long-feared economy-killing yield spike has yet to appear.
During the past few months, I have been discussing this with participants in the bond markets and getting a variety of responses. The one I come back to is surprisingly simple: Increased demand for quality long-term bonds combined with a limited supply has created a shortage of investment-grade securities.