Darius McDermott: Debt, duration and discipline in bond markets

The fixed income market is in an odd place. Falling US interest rates should be good news for investors, but the pressures of high government debt are keeping yields elevated, particularly for longer-dated debt. Until recently, corporate bond spreads over government bonds were at their lowest level in almost 20 years, apparently pricing in little or no risk as investors reasoned that any spread was better than no spread and all-in yields still looked attractive. These concerns haven't mattered much to investors, who have seen good returns from fixed income for the year to date, and are ...