ECB plans to raise rates will prove to be a policy mistake

ON BONDS

Western Asset Management's Dipankar Shewaram examines the multiple risks that are likely to cause sustained uncertainty and volatility in global bond markets.

Where Ben Bernanke has reiterated the Fed’s commitment to quantitative easing despite an increasingly durable economic expansion, European Central Bank president Jean-Claude Trichet has plainly communicated the ECB’s intent to raise policy rates by 25bps in April. We would consider this a policy mistake. In our global bond portfolios, we remain comfortable with the issuers that comprise our overweight to the financial sub-sector within our corporate bond overweight. These financials are large, global institutions with diversified assets and access to multiple sources of funding. Against ...