“As a follower of your excellent service for many years, I am watching the current moves in US Treasuries. I fully understand the reasons for these movements but could you explain why any increase in treasury and bund yields may have a follow-on effect on corporate bond values? Forgive me if I haven't quite grasped the nettle on this.”

David Fuller's view

I thank you for your long interest in our service and for this question which will also be of interest to some other subscribers.

Government bonds are generally regarded as the safest debt instruments, although this is not always true, especially in the era of corporate Autonomies.  Nevertheless, government bonds are the most influential, determining the direction of prices for fixed interest investments and yields to maturity.  Therefore, if the prices of government bonds decline, causing their yields to maturity to rise, corporate bonds will almost certainly follow this lead.