The below chart is an interest rate ‘heat map’ for the Barclays Global Treasury Index. Amazingly, 70% of the $26 trillion in the global bond market is yielding less than 1% (half of that is yielding < 0%). The United States is one of the few developed nations with a positive yield curve across all maturities.
Global capital flows to where it’s treated best. For foreign investors, the United States bond market remains attractive due to the resiliency of the economy, interest rate differential, and stronger dollar. Too many investors get fixated on the Fed which drives market expectations and investor appetite for risk. However, global interest rates/capital flows are impactful for U.S. bond yields and interest rates. Capital allocators do not operate in a vacuum.
*Source: Bloomberg, Barclays.