While European government bonds continue to fall, indicative of the flows rather than a reduction of the stock of debt, which in Europe continues to grow, not helped much by the latest benign inflation figures - graph source Bloomberg:
On another note, equities in Europe have continued to rally and credit spreads have continued to tighten while the 10 year German yield has continued to fall, while volatility (bottom graph) has remained muted
- graph source Bloomberg:
When it comes to volatilities, they have been repressed, no doubt by central banks intervention as illustrated in the below graph displaying the VIX, the MOVE index, the CVIX index and EM FX volatility index, the JP Morgan EM-VXY - graph source Bloomberg:
Because many defined benefit plans are closed to new workers, managers are more concerned with having a steady stream of income every year to meet their annual payout than generating an above average market return or even meet the historical 6% - 8% returns on equities. Retirement plans offered to new workers are mainly 401(k) plans in which the worker is responsible for making investment allocation decisions.
Federal Reserve data show private pensions began reducing risk in the second half of 2013, shedding $11.3 billion in stocks and loading up on more than $100 billion in Treasuries, agency debt and corporate bonds. Tremblay believes this trend could last for a decade." - source Reuters.