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The US faces the same economic challenges as the rest of the developed world: deficient demand that may endure for a generation. The question is whether its modest demographic advantage will prevent an infection of negative interest rates reaching its shores.

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• Yield curve valuation suggests short 30-year and long 10-year on a relative basis.

• The negative yields on inflation bonds reflect their embedded protection against deflation and offer little benefit against inflation at current prices.

• Corporate spreads are narrow and are lower than any period since the Great Recession of 2008, which suggests corporate bonds offer poor value.

• Corporate yields offer a compelling relative value trade with a long 7-year and short 5-year position.

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