Demand for high-yield credit and investment grade is creeping up

ON BONDS

DENISE COLLINS, investment analyst at City Asset Management on Bonds

In recent months, risk aversion has been the predominant sentiment throughout global bond markets. Fears of a sovereign debt crisis saw investors flock towards perceived safe-haven assets given the increased likelihood of defaults in April and May. Subsequently, following a rebound in risk assets in June and July, it now seems growth – or rather lack of growth – is the leading driver of a new flight to quality. German 10-year and 30-year government bond yields fell to record lows during mid-August, as did the yield on two-year gilt, while 10-year gilt yields fell to their lowest since...