C’Mon, Take the Bond Profits and Run

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Vanguard, Wells Capital Call for a Corporate Bond Reality Check

Link: Vanguard, Wells Capital Call for a Corporate Bond Reality Check

Quote1: “Some of the world’s biggest investors, including Vanguard Group Inc. and Wells Fargo & Co.’s asset management arm, are dialing down the risk they take in U.S. corporate bonds, even as central banks globally keep the money spigots on.”

Quote2: “Global economic growth is expected to slow to 2.9 percent in 2016 from 3.1 percent in 2015, Bloomberg data show. With weakening global growth and growing debt levels, the corporate bond rally lacks long-term support, said Randy Brown, who oversees $109 billion at Sun Life Financial Inc. in Toronto. He has been buying safer corporate bonds in less cyclical sectors.

Quote3: ““The longer that rates are lower, the more risk there is at the other end,” said Brown, Sun Life’s chief investment officer. “Credit is challenged and ultimately has to reprice.”