Macro Series

Global Letter: A tale of toggle PIKs

John Llewellyn

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Credit market excesses typically occur in times of low interest rates, when investor demand for higher-yielding instruments leads to the creation of asset classes with returns that, in hindsight, were out of line with the risk involved. So it is of at least prima face concern 1 that yields on fixed income asset classes are now even lower than they were in the run-up to the great financial crisis. 2