FYI: 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.
This shortage is why several bond-market observers such as Jeff Gundlach and Gary Shilling expect rates to stay low.
Regards,
Ted
http://www.bloombergview.com/articles/2015-03-17/world-has-a-deficit-of-high-quality-debt
