As global interest rates have fallen, with $10 trillion of sovereign bonds carrying negative yields, investors are struggling to find productive ways to deploy cash in turbulent equity and fixed income markets. Cross-border cash flow into debt issued by countries where inflation is benign (such as Russia, Brazil, and Indonesia) has been one result.
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Negative interest rates 'really starting to bite' - Blackrock
"Interest rates are really starting to bite. Cash is now expensive," said Stephen Cohen, global head of fixed income beta at the world's largest asset manager, said at a briefing. "Cross-border flows are being driven by 'how do I get away from negative yields'," he told reporters in London. Cohen said low yields and interest rates are creating distortions in global fixed income markets. His colleague Owen Murfin, co-lead manager for global bond strategies, said "high quality" income streams offered by investment grade bonds and U.S. mortgage bonds were among the most attractive areas to invest.
