'Overarching theme in fixed income will be the search for yield'
Investors will likely continue their demand for bonds as they search for yield in 2013, Michael Lillard, chief investment officer for Prudential Fixed Income, said during Prudential's 2013 Global Economic & Retirement Market Outlook.
For now, the ongoing budget battle in Washington, D.C., remains a "cloud hanging over our economy," along with slow job growth. For those reasons, investors will likely shy away from government debt, Lillard said, instead finding opportunities in high yield, U.S. money center banks, AAA collateralized loan obligations and emerging markets/foreign exchange.
"In 2012, the combination of low growth and inflation, combined with high demand from pension funds, retail investors and, of course, the Fed, was a formula for low Treasury rates and declining spreads across fixed income sectors in 2012," Lillard said. "In a world where demand for bonds remains strong, but developed country de-leveraging both constrains growth and reduces supply, I believe the overarching theme in fixed income will continue to be the search for yield."
Interested in more information? Watch his commentary above or read the news release. Want to speak with Mike? Email Theresa Miller.