U.S. 10-year yields have hit record lows as investors head towards safe-have assets, pushing yields on the note to 1.52 per cent.
But investors have also clamored for government debt in Europe and Asia, sending yields on 10-year sovereign debt below 1.5 per cent in more than half-a-dozen countries.
In a note out to clients, Barclay’s analyst Drew Mogavero details the impact these yields are having on the credit market.
“The demand for ‘safe assets’ is certainly having an impact on credit,” he says. “Investment Grade corporate total returns now exceed excess returns by over 300 basis points – something that few would have predicted at the start of the year.”
Below, movement in the U.S. 10 year, along with sovereigns with borrowing costs below 1.5 per cent.