The Search For Yield: How Long Could It Last?

Stubbornly low yields have made income tough to come by in recent years, and they have sent investors searching for yield and income wherever they can find it. A key question on investors’ minds remains how long low rates, and the accompanying search for yield, are likely to continue. As I write in my new Market Perspectives paper, “Stuck in the Low Yield Environment”, the search for yield is likely to remain in place throughout the remainder of this year and into 2015. Why? The reality is that while the U.S. economy continues to recover, short-term interest rates are likely to remain anchored at zero throughout 2014. The Federal Reserve (Fed) is facing few inflationary pressures and structural challenges are keeping employment low. Meanwhile, there are several factors—both cyclical and secular—that are conspiring to hold down long-term rates. These factors include the tail end of the consumer deleveraging,... Read more