Inflows Into Credit: A Demographic Story

As part of an ongoing effort to share relevant perspectives with our partners, we periodically circulate select third-party research, data points, and market observations that we believe are interesting and timely. These notes are intended to be concise and informational, simply highlighting items that have caught our attention and may be useful as you think about portfolio positioning and broader market developments. All materials are fully attributed to their original authors.

Two interesting charts from Deutsche Bank caught our attention. Inflows into credit are a demographic story, not a tactical one. As boomers reach peak wealth and start shifting from stocks and home equity into retirement income, higher rates have finally made annuities attractive. For the past twenty years, 10-year Treasury yields averaged 2.9%. With rates where they are today, boomers are buying annuities — and to offset those liabilities, insurers are turning to corporates and securitized credit. Deutsche Bank thinks that pull could reach $2–4 trillion over the next decade.

Please let us know if you would like to discuss further. As always, we appreciate your partnership.