The negative effect of quantitative easing (QE) is likely to continue on the bond market for the next decade, while having a negligible impact on economic growth, according to global investment managers Payden & Rygel.

Speaking at an adviser lunch hosted by Grant Samuel Funds Management in Sydney last week, Payden & Rygel senior vice-president Brad Boyd said while markets had priced in an interest rate rise over the last few years, the pendulum of sentiment was now swinging the other way.

“The market is overestimating the risk of deflation and negative bond rates due to low prices in oil and other commodities,” Boyd said.

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