Bond outlook: Where are the opportunities in 2020?

New opportunity

After a nice run with Treasuries and Bunds this year, bond investors will be mainly looking for opportunities among high-quality corporate bonds, says Jan Wagner…

This year, bond investors have had plenty reason to celebrate. In the US, fears of an economic slowdown caused by a trade conflict with China prompted the Fed to cut interest rates three times. Volatility in the stock market also led investors to reallocate in favour of US Treasuries. As a result, the yield on the 10-year Treasury fell to 1.4 per cent in August from 2.6 per cent in January. Due to the inverse relationship between a bond’s yield and its price, that equals a capital gain of 13 per cent for the period.

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