The global economy is recovering significantly, starting from the United States. Corporate profits are pointing upwards, demand for commodities is increasing and sentiment indicators are rising strongly. Public spending will continue to support the economy and central bank policy is also market-friendly.
The main risk lies in permanently higher inflation due to a possible overheating of the economy and because of high budget deficits.
This leads to a negative assessment for government bonds from the developed world and also for corporate bonds with good to very good credit ratings. In general, securities with low interest rate sensitivity are preferred in this environment.
A rapid and sharp rise in bond yields poses therefore the biggest threat. Higher bond yields weigh on the stock market, mainly on the growth stocks, and lead to increased volatility.
Development of bond yields of US- and EUR-Government-Bonds and EUR-Corporate-Bonds
Investment-Grade (5/2016-5/2021)
Development of bond yields of European High-Yield-Bonds compared with global High-Yield-Bonds and Emerging-Markets-Corporate-Bonds (5/2016-5/2021)
Please note:
The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.
Ratio-Overview (more information and all risk notes can be found at www.erste-am.com)
Legal note:
Prognoses are no reliable indicator for future performance.
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