Taps Coogan – August 9th, 2021

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Investment grade corporate bond yields have hit their lowest level when adjusted for inflation since 1980, as the following chart from Bank of America via ISABELNET shows.

As we have noted before, everything from 30-year treasuries to junk bonds are now trading at negative real rates. Unless you want the junkiest of the junk bonds, the only way left to make money above the current inflation rate in US bonds is to make a bet that the lowest real rates in 40 years get even lower. That may be a good bet, or not, but it’s the antithesis of why most people buy investment grade bonds.

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