What are the biggest risks to bond investors today?

Aggressive quantitative easing announced by the ECB in March, including a plan to purchase euro-denominated corporate bonds, coupled with a relatively dovish Federal Reserve, weakened the dollar and ignited an oil and commodity price rally that has undoubtedly had a positive impact on risk markets.

While the Fed has more recently signalled its intention to hike rates this year, markets appear relaxed with this likelihood. The fact remains that central bank policy globally continues to be rather accommodative and that the yield advantage of corporate bonds versus an increasing universe of negative yielding government bonds is quite attractive. The biggest risks to this view include a return to the deflationary price action across risk assets experienced at the start of the year triggered by global growth concerns and a stronger dollar. A more aggressive Fed rate hiking path wo...