Why short-term corporate bonds are interesting

Frankfurt Are bonds attractive again given the turnaround in interest rates? The answer of many investors and investment strategists to this question is a resounding “yes, but”. For example, Raymond Sagayam, Pictet Asset Management’s bond chief, says: “Bond markets are back, but investors should tread carefully.”

There are good reasons for being cautious: on the one hand, bond yields have risen so significantly this year that they are now back to the level they were last more than ten years ago. On the other hand, the rapid increase in yields meant that bondholders had to accept historically high price losses.

That’s the nature of things: after all, bond yields rise when prices fall and vice versa. And strategists fear that this process is not yet over: the central banks will continue to raise interest rates, which means that bond prices will continue to fall and yields will rise.