The Weekly Brief (21 March 2016) - J.P. Morgan Asset Management

The Weekly Brief (21 March 2016)

Contributor Global Markets Insights Strategy Team

Markets continue to feel the effect of last week’s European Central Bank (ECB) announcement.

As highlighted in this week’s chart, the inclusion of non-financial corporate bonds in the ECB’s asset purchase programme has pushed yields in the asset class to below 1% – its lowest level in over a year. This has prompted a wave of corporate bond issuance as firms look to take advantage of these low yields. The question now is what will eurozone firms do with these newly-borrowed funds? In theory, this new wave of borrowing will make its way into the real economy via increased business investment. However, it is also possible that firms use the funds to boost their dividend and share buyback programmes; either way it could be good for companies and investors.

Eurozone investment grade corporate bond yields

Source: Bloomberg, J.P. Morgan Asset Management; data as of 11 March 2016.

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The Weekly Brief (21 March 2016)