Hongkong and Shanghai Banking Corporation HSBC Global Asset Management now applauds shorter duration fixed-income strategies as the only possible solution for the current negative debt.
The current negative debt settles below 16 trillion dollars, following the value of negative-yielding bonds falling below $16 trillion. This comes just a few months, that is, earlier this year, where the debt relentlessly rose upwards above $17 trillion. However, the current debt stands below $16 billion.
“Even with such a debt, all is not lost for we can still pile the negative debt downwards.” Affirming this in a recent interview, Joseph Little, co-chief investment officer of multi asset at HSBC Global Asset Management assured the Bloomberg co-host that there is still hope for pilling the $16 trillion debt downwards.
However, according to Joseph Little, the pilling process would still be challenging due to various reasons. For instance, and mainly, Joseph narrates that government bonds have been diversifying for multi-asset strategies over the past. As a result, the rally for negative debts has really been a benefit for most multi-asset investors. More so, solving such a negative debt situation would be challenging for at this point, it is still tricky exactly what multi-asset investors know especially whenever they do their evaluation.
Even if it’s challenging, there is no doubt that such a negative debt requires immediate and effective solution. One such effective solution that can help in restoring back the debt to its earlier state could be the use of shorter duration fixed-income strategies. According to the HSBC Global Asset Management, the implementation of such strategies would help in quickly and effectively resolving the $16 trillion current negative debt.
Shorter duration fixed-income strategies would only be effective if they focus on the United States and rather not globally. By taking the shorter duration fixed-income strategies globally, such would be challenging, which would lead to the exposure of long-term duration.
Featured image via HSBC