Brexit triggers flight to safety in government bonds, TD manager says

Robert Pemberton expects interest rates to stay low.

Sonita Horvitch 6 July, 2016 | 5:00PM
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Robert Pemberton, managing director and head of fixed income at TD Asset Management, says that the unexpected result of the United Kingdom's referendum on its membership in the European Union has triggered a flight to quality in the global bond market.

"The June 23 vote by Britain (known as Brexit) to leave the European Union," says Pemberton, "has substantially increased the already high percentage of sovereign bonds in the developed world that have negative nominal yields, indicating the extent of the flow of funds into this market."

Before this vote, US$8.2 trillion in developed-world sovereign bonds, representing 32% of this total market, had negative nominal yields, Pemberton says. "Over the first two days following the Brexit vote, that number swelled to US$9.4 trillion, or 38% of the global sovereign-debt market."

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Sonita Horvitch

Sonita Horvitch  

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