Salient to Investors:

  • Jonathan Mackay at Morgan Stanley Wealth Management said investment-grade bonds will post annual returns of 1% to 2% for the next 7 years versus 8.7% average annual gains in the 30 years through 2012 – Fed stimulus is supporting bond values but lowering portfolio returns.
  • Michael Hartnett at Bank of America said 45% of government bonds yield less than 1%.
  • Investors have fled into junk-rated debt, equities, real estate and private equity.
  • The speculative-grade default rate is less than half its long-term average.



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