Our services in the selected location:
  • No services available for your region.
Select Location:
Remember my selection
We have been made aware that there are external parties falsely claiming to carry out financial services on behalf of Goldman Sachs (including Goldman Sachs Asset Management International and Goldman Sachs International) in order to market fake investment products and to solicit monetary payments. These external parties may pose as Goldman Sachs through the use of fraudulent communications via email, instant messaging or phone, as well as through the use of fake brochures and other documents containing Goldman Sachs branding and logos.
The FCA has issued warnings about these fraudulent activities which can be found here and here.
It is important to know that any communication you receive from Goldman Sachs would only come from an @gs.com e-mail address and/or be found on the goldmansachs.com website. Further information regarding how you can protect yourself from fraudulent activity online and how you can contact us about this can be found on the Goldman Sachs Security page, available here.
Your browser is out of date. It has known security flaws and may not display all features of this and other websites

August 2019 | GSAM Connect

Can a Negative be Positive? In Our View, Yes.

One year ago, German sovereign bonds with a maturity of six-years or less delivered a negative yield. As of this month, negative yields extend across the maturity spectrum through to 30-year bonds (Exhibit 1). Euro-denominated corporate bond yields have tracked sovereign bond yields lower, with around three quarters of the investment grade market being in negative yield territory (Exhibit 2).

Faced with this low or negative rate backdrop, growth uncertainty and yield curve inversion investors may seek to de-risk. However, we think the current environment—which has also been characterized by an uptick in bond-level performance dispersion¹—presents continued openings for active security selection.

Moreover, we think forthcoming monetary policy easing in the Euro area may provide a near-term tailwind for euro-denominated corporate credit, thereby diminishing the case to be underweight. In addition, on a currency-hedged basis, it is not necessarily attractive for European investors to seek higher yields in US fixed income. In fact, after taking into consideration hedging costs, any perceived yield premium can be eroded or even turn negative.

Overall, we would caution against the common perception that negative yields preclude positive returns. In our view, active management, including security selection and yield curve shape views, can continue to deliver potential positive returns, even against a rising stockpile of negative yielding-debt.

Exhibit 1 Negative yields have extended to longer sovereign bond maturities…

Source: Macrobond, GSAM. As of August 28, 2019.

Exhibit 2: …and across euro-denominated corporate bond markets

Source: BoAML ICE European Corporate Index. As of August 2019.

Stay posted on the latest market developments and key themes for your portfolios and practices.
Get Connected

RELATED INSIGHTS

August 2019 | Corporate Credit Views
Can a Negative be Positive? In Our View, Yes.

One year ago, German sovereign bonds with a maturity of six-years or less delivered a negative yield.

July 2019 | GSAM Connect
The Interaction of Growth and Policy

Expectations for easier monetary policy in response to weaker growth prospects have given rise to three key market themes among fixed income spread sectors, including corporate credit.