Risk

Earlier this month, UBS polled 80 central bank reserve managers on their investment intentions over the next decade. Asked what the one biggest change would be, 38 per cent said they would buy more so-called “spread product” – that is, any form of credit except Treasuries. A further 18 per cent went for more equities and 12 per cent for alternative assets such as hedge funds and private equity.

So more than two-thirds said, by implication, that they would reduce their weighting in Treasuries. This seems perfectly healthy. To date, the vast majority of reserve managers have not been allowed to buy riskier assets. As they gain permission and the necessary expertise, the price of Treasuries will cease to be distorted by massive forced buying.

..."not been allowed to buy riskier assets".

As my friend flinter says, "The concept of
what is riskier, is about to do a pole shift."

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