Investors are holding more money than ever, despite a surge in government and corporate bond issuance since the start of the year. According to the Institute of Investment Companies, by January 4, a record amount of 4.814 trillion was accumulated on the exchange accounts of investors. US dollars. This is the largest amount ever recorded in this short period of time, with a previous record of $4.79 trillion. dollars was fixed in May 2020 at the height of the first wave of the pandemic and the deep recession it caused.

These funds, which are owned by both retail and large institutional investors, could theoretically infiltrate stocks and drive their prices back up. However, investment strategists warn that investors may be risk averse as uncertainty still surrounds the economy and stock markets. “It’s a mountain of money,” said Bank of America analyst Stephen Schutmeier, explaining that higher interest rates make cash that pays in a few years more attractive. Similar are the estimates of Jack Ablin of Cresset Capital, who notes significant changes in the investment environment. As he points out, “cash is no longer loss-making, but it carries a reasonable rate of return, so more factors need to be considered by the investor to decide whether it is worth the risk to secure higher returns.”

At the same time, bond issuances around the world are exploding, and from the beginning of the year until Wednesday, January 18, the total value of debt issues reached $586 billion. Among them issuances of bonds of banks and companies in the financial sector. a sector that has hit $250 billion year-to-date. And bonds across the board are up 4.1%, the best growth since 1999. From European banks to Asian corporations to emerging market governments, virtually every corner of the bond market experiencing explosive growth. National debt management authorities and companies are suddenly finding investors’ continued interest in the debt market as inflation slows and the willingness of major central banks to continue to ease interest rates increases from now on. After all, for many investors, bonds are looking increasingly attractive now that they have preceded their historic drop last year, when yields reached their highest levels since the 2008 global financial crisis. Especially as the outlook for a global slowdown provides room for further growth.

At the same time, bond issuances around the world are exploding and from the beginning of the year to Wednesday, January 18, their total value reached $586 billion.

Speaking to Bloomberg, Omar Slim, chief executive of PineBridge Investments, stressed that “we estimate that bond prices will continue to rise, especially when it comes to investment grade bonds.” He stresses that corporate fundamentals remain strong, while “the reversal seen in various Chinese policies will provide a much-needed boost to global growth and mitigate some risks for emerging markets through additional support.”

Investment-grade US Treasury bonds will deliver a 10% yield this year, following the worst performance in 50 years last year, according to economists at Bloomberg Intelligence. Those earnings will be more than double those projected for US corporate junk bonds, because when the economy slows, highly rated securities tend to pay more than low-rated ones. Emerging market bonds and euro-denominated investment grade bonds are expected to rise by 8% and 4.5%, respectively.