The European Central Bank (ECB)’s March meeting once more confirmed that traditional fixed-income investments no longer generate much-needed excess returns in a climate characterised by cheap central bank liquidity.
In addition to this realisation, central bankers also sprang a surprise by expanding not only the volume of their bond purchase programme but also the range of instruments being purchased by adding corporate bonds to the list. For investors, this step means that another fixed income segment is expect to join government bonds, covered bonds and securitisations in receiving massive support from an ‘investor of last resort’.
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