HALISTER1: U.S. High-Grade Corporate Bonds ‘Only Game in Town’: BofAML

U.S. High-Grade Corporate Bonds ‘Only Game in Town’: BofAML

(Bloomberg) -- Unlike during 2013 “Taper Tantrum,” U.S. high-grade corporate bond market is “only game in town globally”; overseas investors should remain steady buyers, BofAML strategist Hans Mikkelsen writes in note Monday.
  • This means a more significant sell-off in USTs would be needed to generate enough outflows from bond funds and ETFs that credit spreads move wider
  • In few trading days since Nov. 8 U.S. election, importance of foreign inflows has been seen as back-end buying accelerated, which helped offset domestic investor selling
  • U.S. high grade corporate bond market remains “only game in town” where overseas investors can get both bonds and yield
    • During Taper Tantrum, market paid out only 17% of global investment grade yield income; it presently pays out 28% of such yield
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Hans Mikkelsen (Bank of America Corp)

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