Bond investors are regularly accused of reaching for yield, that is, earning too little for the risk they are taking. Kenneth Leech, chief investment officer at the $465 billion Western Asset Management, argues that this is too simplistic. Investors are responding to a global economy that is growing but growing slowly. Speaking from the firm’s headquarters in Pasadena, California, Leech says that despite likely interest rate hikes next year, he still favours spread sectors, including junk bonds and emerging markets debt.
The Federal Reserve is steadily reducing its asset-purchasing programme. Hawks on the Fed’s board such as Charles Plosser Philadelphia and Richard Fisher Dallas are suggesting the timetable for a...
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