Fed paper highlights investor dynamics

02/1/2013 | Reuters

The Federal Reserve posted a research paper online that delves into how investor dynamics affect the U.S. corporate bond market. Researchers said institutional investors tend to exhibit "herd-like" behavior more in the corporate bond market than in stocks. "We find substantial institutional herding in U.S. corporate bonds, much higher than that previously documented in the equity markets," wrote authors Fang Cai, Song Han and Dan Li, who are staff economists at the Federal Reserve Board in Washington, D.C.

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