Alternatively, investors can capture the supply and demand imbalance and potential price appreciation in global bonds through international government bond ETFs, such as the SPDR Barclays International Treasury Bond ETF (NYSEArca: BWX), which has a 0.97% 30-day SEC yield, andiShares International Treasury Bond ETF (NYSEArca: IGOV), which has a 0.72% 30-day SEC yield. Both ETFs include large 20% exposures to Japan, along with Italy, France, Germany and U.K. [International Spice With a Treasury ETF]
Additionally, with another global economic slowdown and low inflationary pressure in developed economies, investors could continue to pick up bonds and temper rising yield expectations next year. [Foreign Investors Prop Up Treasury ETFs]
“It will keep global yields lower than they would be otherwise,” Chris Low, chief economist at FTN Financial, said in the article. The demand for bonds “reflects disappointing global growth and that’s been a consistent theme.”
Nikolaos Panigirtzoglou, a strategist at JPMorgan, even argues that the gap in demand will further depress yields next year.
“The environment of 2015 will be bullish for bonds,” Panigirtzoglou said in the article. “Market prices will move in a way that the gap will close. Yields will fall.”
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.