Bonds fall but Asian junk stay afloat

Government bonds have been falling. Bloomberg reports that more than $450 billion has been wiped out across global bond markets in the past few weeks.

According to Bloomberg, the main reasons bond prices are falling are:

1. Crude oil prices have rebounded

2. Deflation concerns have receded

3. European economic growth prospects have improved

4. Too many people were invested too heavily in bonds

5. Bond yields had fallen below zero.

However, while government bond prices have fallen and yields risen, Bloomberg reports that Asia’s riskiest bond issuers are getting the lowest borrowing costs of the year.

Yields on dollar-denominated Asian sub-investment grade notes plunged 224 basis points to 7.54 percent as of May 11 from the January peak of 9.78 percent, according to a Bank of America Merrill Lynch index. That’s near the year’s low of 7.52 percent marked on April 30.