LONDON (Reuters) - Rock-bottom interest rates, with some $10 trillion of sovereign bonds carrying negative yields, are fast becoming the biggest worry for investors, asset manager Blackrock said on Thursday.
“Interest rates are really starting to bite. Cash is now expensive,” said Stephen Cohen, global head of fixed income beta at the world’s largest asset manager, said at a briefing.
“Cross-border flows are being driven by ‘how do I get away from negative yields’,” he told reporters in London.
Cohen said low yields and interest rates are creating distortions in global fixed income markets.
His colleague Owen Murfin, co-lead manager for global bond strategies, said “high quality” income streams offered by investment grade bonds and U.S. mortgage bonds were among the most attractive areas to invest.
Sergio Trigo Paz, Blackrock’s head of emerging market fixed income, said he liked debt issued by Russia, Brazil and Indonesia as inflation turned more benign in these countries.
“We like right now Russia, Brazil, Indonesia across the board,” he said. “We are more negative on Eastern Europe.
Reporting by Jamie McGeever and Karin Strohecker; editing by Sujata Rao