U.S. corporations are on track to raise a trillion dollars in new debt this year, and the Bank of England just added more fuel to the bond fire.
The BOE cut rates by a quarter point, as expected. But as part of its policy easing, it also announced an expansion of quantitative easing, and like the European Central Bank, it included corporate bonds in its plans.
That brings a big new buyer to an already hot corporate debt market, and its program and the programs of other central banks put downward pressure on global interest rates, even as the Federal Reserve hopes to tighten sometime later this year.
U.S. corporate debt has already been a magnet for investors seeking better yield than they can get overseas, and the Bank of England just helped accelerate that trend with its rate cut and easy policy. Negative yields in Europe and Japan have created a bonanza for U.S. fixed income.