The extension of the European Central Bank’s (ECB) quantitative easing programme, solid supply and demand and companies’ thrifty borrowing habits all suggest the continent’s bond market will be well-placed throughout the coming year Kjaersgaard, manager of Alliance Bernstein’s European Income Portfolio, said.
Despite repeated warnings of a market rotation away from bonds, Kjaersgaard instead insists the ECB’s extension of quantitative easing to December 2017 will put “a solid floor under euro-area bond prices” and help anchor regional yields.
He added that the supply and demand dynamics in Europe are a good sign for bond markets.
“European corporate bond issuance has been growing, but so too has demand from bond buyers seeking out higher-yielding assets as government bond yields have lurched ever-lower,” he said.
“Buying demand continues comfortably to outstrip the supply available – which is positive for bond creditors and prices.”