Yellen Nomination: Where to Find Value in Bonds

As Janet Yellen is nominated to take over from Ben Bernanke as chairman of the US Federal Reserve, we examine what it may mean for money policy and bonds

J.P. Morgan Asset Management 10 October, 2013 | 10:01AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here Nick Gartside, Head of Fixed Income for J.P. Morgan Asset Management, discusses where to find value in bonds in light of Yellen nomination.

Janet Yellen’s recent nomination as next chairman of the US Federal Reserve likely means no unusual lurches in easy-money policies from the world’s central banks in the near future.  Coupled with Carney’s signature forward guidance policy – rates to be low for longer through 2016 – that leaves bond market participants in a continued search for yield.

So where are we finding value in the bond markets today?  With rates set to stay extremely accommodative over an extended period of time, government bonds are the last place to allocate. We are short government bonds in favour of more attractive spread products.  Three sectors we find to be the best source of value in the bond markets:

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.