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Demand for bonds seen increasing in coming decades

December 12, 2012|By Andrew Tangel
(Source: BlackRock, citing…)

NEW YORK -- There may not be enough bonds to satisfy demand in coming years as the private sector trims debt and workers retire.

Rick Rieder, chief investment officer for fixed income at BlackRock, said central banks will likely keep interest rates low in coming years as countries continue reducing their debt loads, or leverage.

"Central banks have to keep real rates low to deal with this burden of leverage,” Rieder said at an event in New York on Wednesday morning.

Meanwhile, the percentage of the working-age population in the United States, Italy, Germany, Japan and China is projected to decrease in coming years, Rieder said.

Fewer people will be contributing to economic growth, he said, as the number of retirees relying on bonds to finance their retirement would increase.

“That means there’s a cap on growth and it means [there’s] demand for income that’s not going away," Rieder said. "And so for people to perpetuate their lifestyle, they need to buy fixed-income.”

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