![]() In the U.K., the benchmark interest rate is 0.5%. federal funds rate, compared with 1.75% a decade ago. Interest rates have plunged to 0.125% for the U.S. That equation has changed, as interest rates have dropped and continue to remain low, while risk has risen and liquidity has shrunk, says Helene Donnadieu, principal and asset management practice global manager at the Boston Consulting Group, based in Paris. Government debt offered low returns, but with low-almost zero-risk and plenty of liquidity. Sovereign debt was a counterpoint to high-risk, high-return asset classes like equities. ![]() But recently big cracks have appeared in those foundations. Government bonds, especially from Europe and the U.S., have been an investment staple for their stability.
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