Now is the time to focus on government bond yield charts

BONDS

Rarely do credit fund managers find themselves as interested in charts showing government bond yields as they do right now.

Escalating sovereign solvency concerns surrounding Greece and other peripheral eurozone economies over the last quarter saw a massive retreat in risk appetite, and the ensuing flight to quality saw gilt yields, having traded in a range around the 4% level for a number of months, fall to multi-month lows below 3.4% for 10-year maturities. Despite credit spreads experiencing their first sustained period of widening since the start of the rally back in March 2009, the sharp move in gilt yields allowed investment grade bond absolute returns to remain in positive territory for the second quar...