“Goldman Sachs Group Inc. (GS) President Gary Cohn warned of a potential drop in fixed-income prices as bankers and policy makers in Davos celebrated surging demand for financial assets.
Debt markets that have seen junk-bond yields drop to record lows may face a “substantial repricing” if interest rates spike or investors begin pulling money out of fixed income, Cohn, 52, said in an interview yesterday with Bloomberg Television’s Erik Schatzker at the World Economic Forum in Davos, Switzerland.
The Spanish government attracted record demand for its 7 billion-euro ($9.4 billion) sale of 10-year bonds this week and Portugal sold five-year debt for the first time in two years. The Standard & Poor’s 500 Index (SPX) topped 1,500 yesterday for the first time since 2007.
“Markets are really giving the sign that progress has been made,” Martin Senn, chief executive officer of Zurich Insurance Group AG, said in an interview after a meeting of bankers and policy makers including Italian Prime Minister Mario Monti and Bank of Canada Governor Mark Carney. Senn said that he and his colleagues have to avoid becoming “complacent.”
“I’m not concerned at this point of that because there’s a good awareness of the respective risks,” he said.
