Global Investors Chase Safety, Yield in U.S. Bonds
October 22 2017 - 11:29AM
Dow Jones News
By Daniel Kruger
While the U.S. economy has yet to return to rates of growth seen
before the financial crisis, the U.S. bond market has been a magnet
for global savings. Treasurys have been a repository for central
banks looking to bolster their financial reserves and for private
investors seeking to preserve capital.
Since 2014, central banks in Europe and Asia have stepped up
their efforts to boost economic growth and spur investment by
driving interest rates below zero. That has led to an infusion of
cash into the U.S. corporate bond market, which offers relatively
high interest with low default rates.
While central banks have slowed their accumulation of Treasurys,
improvements in the global economy could reverse that trend.
After initial spasms of concern about the health of U.S.
corporate credit during the recession, investors -- abetted by
trillions of dollars of Fed bond purchases of Treasurys and
mortgage-backed securities -- piled into company bonds.
Many foreign investors came to hold Treasury bonds because of a
trade surplus with the U.S. For China, owning Treasurys has also
often been a way to prevent its currency from appreciating.
(END) Dow Jones Newswires
October 22, 2017 11:14 ET (15:14 GMT)
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