A yield race to the bottom

the technical bid in the market, putting even more pressure on yields. The term “high yield” has become relative, as in real terms yields have arguably become not so high anymore.

Given the fragility of the real economy, I believe we are still some way off from the risk of any policy changes in the short-term; however, I would expect some volatility in the marketplace once central banks and governments alike start to signal that they will be tapering their accommodative measures.

The full, indefinite, freedom of movement and reopening of businesses, particularly in the services sector, backed by economic data, could be deemed as an inflection point in terms of market timing in my opinion. Until then, the expectation is for asset prices to rise gradually and yields to grind tighter.

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Disclaimer: This article was written by Simon Psaila, Investment manager at Calamatta Cuschieri. The article is issued by Calamatta Cuschieri Investment Services

Ltd which is licensed to conduct investment services business under the Investments Services Act by the MFSA and

is also registered as a Tied Insurance Intermediary under the Insurance Distribution

Act 2018.