The Federal Reserve's interest rate cut triggers a buying spree, as the spread on U.S. corporate bonds is compressed to a 27-year low

After the Federal Reserve's first interest rate cut since 2024, investors are rushing to lock in high yields, and the risk premium on U.S. corporate bonds has fallen to 72 basis points, a new 27-year low. Despite the rate cut, bond yields remain higher than levels seen over the past 15 years, attracting yield-driven investors such as insurance companies to continue buying. Barclays analysts point out that the current yields are still attractive to income-focused investors and expect that future rate cuts will further lower yields