Government paper set for an impressive 2005

Bond investors have had a tough 2004, with assumptions that rising interest rates would push yields ...

Bond investors have had a tough 2004, with assumptions that rising interest rates would push yields higher not coming to fruition. In fact, yields have actually fallen, particularly in recent months. Denis Gould, head of fixed income at Axa Investment Managers, blames pessimism about global economic prospects and buying from Asian central banks for poor returns. He says: "In corporate bonds, the yield spread has fallen to low levels." That said, Gould does still anticipate rising yields in 2005. He believes the market is discounting a year in which growth is subdued, inflation low an...