CORP - Being Vested In Your Investing

• Given the sizeable skew in the distribution of outcomes toward negative real returns, it's extremely important to be selective in high-quality fixed income, and to be truly vested in one’s investments so that portfolios are not permanently impaired.
• In the short term, the common narrative around growth fears (or growth peaking) may not only explain the low level of Treasury yields, but continue to hold yields down until the market receives some clarity around the full potential impact of the delta variant and the efficacy of vaccinations against this and future Covid waves.
• While the delta variant and its impact on growth require monitoring, other reasons for the low level of Treasury yields seem less fundamentally driven.
• Today, there is a surplus of dollars and a lack of demand for bank credit. So, excessive liquidity, in addition to a deficit of Treasury bonds, is forcing the non-economic buying of Treasuries and other high-quality fixed-income assets. Instead of too much debt, the price action in the Treasury market suggests that there is too much demand.

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