US deficit makes investors of government bonds in corporate debt

Investors show signs of their tendency to withdraw their money from US government bonds and pump it into the debt of US and European companies. If these moves continue, money managers that occur in the market for decades can change, namely that nothing is safer than buying the US government’s debt. But with the high US budget deficit, affected by tax discounts and high interest rates, the government may tend to borrow more, which can make corporate debt the safest option. Last June, money managers withdrew $ 3.9 billion from Treasury bonds, while adding $ 10 billion to the debt of European and US businesses with an investment classification, according to the “EFR Global” data. In July, investors added another $ 13 billion to the bonds of US businesses, which are the largest net purchase of customers in the data released since 2015, according to a separate memo of the Barclays strategy on Friday. Michael Nizard, director of investment portfolios at Edmond de Rothschild Assite Management, began moving from government debt to corporate debt at the end of last year and still maintains this position. You may also be interested in: The worst wave of reducing credit rating since 2021 is concerned about corporate debt and in a memorandum published last week, Black Rock strategy has written: “Corporate debt has become a clear choice for quality seekers.” This is a slow change at the rate of the appearance of this transformation. The United States does not have debt in foreign currencies and can push more dollars as needed. When money managers were concerned about the rates for Wars of Customs in April, the performance of US treasury effects was better than corporate bonds, even with the prices of both sectors in general. Foreign demand for Treasury bonds remained flexible, with the high possessions in May. However, the narrowing of the difference in corporate effects may have occurred due to the relatively poor government debt at the moment. The US government lost its last AAA credit rating in May when Moody’s credit rating agency reduced its classification to (AA1). The classification agency pointed to factors that include the width of the deficit and the high interest burden, pointing out that the payments are likely to absorb about 30% of revenue by 2035, compared to 18% in 2024 and 9% in 2021. budget, according to the expectation of the budget’s budget expectation, according to the expectation of the budget’s expectation, according to the expectation of the budget’s expectation, according to the expectation of the budget’s budget expectation, according to the budget’s expectation, according to the expectation of the budget, according to the expectation of the budget of the budget. Independent destination. Results are stronger than expectations at the same time, the profits of companies are still relatively strong, and although there are early warnings, high -quality businesses generally earn enough profits to pay their benefits easily. A larger number of US businesses also exceed their profits in this results season, compared to the same period last year. Corporate debt rates were recently high, reflecting the investor’s demand for this debt. The average return of returns for US businesses is less than 0.8 percentage points during July to Thursday, or 80 basis points. This is much lower than the average of this contract of approximately 120 basis points, according to the data of the “Bloomberg” index. The average difference in the returns of high quality companies denominated in the euro was about 85 basis points in July, compared to about 123 basis points during this contract. For some money managers, high judgments of corporate debt raise concerns. Genesonnstein Holding withdrew its position, which earlier this month preferred the risk of corporate debt over government bond risks. “Schreaters Investment Management”, that the difference in corporate contexts is very limited so that it is not attractive. Even with the optimism of “Black Rock” in general about corporate debt, it reduces the weight of long -term tires for high quality. For the need of the returns, while increasing the weight of the short -term debt. Investment management: “What we have seen about the government’s financial situation is not good news. On the other hand, companies seem to be going well.”