Economics
Global Bond Investors Are Betting Against Central Banks’ Aggressive Tactics
- Markets to ‘scream recession’ on weak U.S. jobs, says Investec
- Investors hold cash, short inflation as slowdown looms large
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Global bond investors are betting against the increasingly aggressive tactics taken by central banks in the chase for economic growth, by turning to strategies that profit when inflation fails to pick up.
In the options market, trades that make money if inflation drops below 1% -- and even below 0% -- have increased. Money managers are buying into government debt, undeterred by negative yields. They are also holding cash, which offers flexibility in the event of economic contraction. A U.S. factory gauge hitting its weakest level since the end of the last recession suggested that might be coming sooner, rather than later.