Searching for yields like a needle in a haystack . .
Yield got even harder to find after last week’s Brexit vote. A global flight to quality after the U.K. voted to leave the European Union pushed the total amount of government bonds with negative yields to $11.7 trillion this week—a record amount. Even as the total available yield in the global bond market shrank, investors that hold U.S. corporate bonds now have a bigger piece of the pie—the largest in at least two decades. That is the highest percentage in at least 20 years, as the following chart shows. That number is up from 28.5% before the Brexit vote, 25.6% at the beginning of the year and 15.8% before the financial crisis.
Sovereign yields from Spain to Japan fell to all-time lows amid optimism that policy makers will act to limit the fallout from the U.K.’s vote to leave the European Union. The yuan extended a weekly slide versus the greenback after a private gauge of China’s manufacturing industry unexpectedly fell. The yen pared a weekly drop.
– In this environment, corporate bonds offer an attractive spread, or yield differential, to Treasury’s and other government bonds of similar maturity, and “with furthermore significant foreign uncertainties—as highlighted by Brexit—we think that it would be difficult not to be bullish,”
–Bank of America report.