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US fed started acquiring corporate bonds. Corporate bond yields have tumbled back down and nurtured a borrowing spree. US companies have sold $2.4Tn of bonds so far this year. Most US firms are however too small to even contemplate issuing bonds, but PPP which ended this summer offered much support to firms in need this year which is why bankruptcies have been so few. source: FT

Federal Open Market Committee said it would buy $120bn of debt per month until they reach their price stability and maximum employment mandate. The vaccine hopes is not enough to save the economy, some say the economy needs further support. With rates said to remain low until 2023, the fed was firmly bullish with regards to economic recovery by the second half of the next year. Monetary policy (buying up more assets) comes with a lag Powell said, and that besides, financial conditions are already healthy. He suggested fiscal policy (packages) would be more suited to support the short term economy. surce: FT 

Inflationary risk is on the rise assuming economic recovery post covid-era. Warning for fixed income assets and growth firms. Nominal GDP growth for 2021 in the US is predicted at about 6% and 5% for Europe by Analysts and Economists. Growth firms hindered by inflation in terms of valuation, see dividend discount models for a refresher on equity valuation, and notice how increasing rates in the denominator diminish present values of price. 

Assuming real interest rates are more likely to increase than decrease we expect a weak long-term bonds investment. If real interest rates rise due to faster growth and investment then strong corporate earnings might offset the impact of the higher real interest rates on stock prices. If savings rates were to dip however then there would be no such offset, and stock prices would then become overvalued.

Credit duration is likely to become very crowded next year - source: www.zerohedge.com, BofA