Global deleveraging will keep the bond market controlled over the next year, according to Tyndall Asset Management (Tyndall AM).
The asset manager said that deleveraging in global government sectors is acting to keep growth and inflation low, affecting the growth of the bond market.
"My view is that this deleveraging around the world is only going to keep bonds fairly controlled, probably this year and maybe into next year, but at the least we're going to have a controlled market for around six months," Tyndall AM head of fixed income Roger Bridges said.
"We're not going to see a rally like we saw last year unless some of the political events that we now see really deteriorate, so qualitative easing (QE) is really important."
Tyndall said that QE measures are being seen in central banks around the world, including the US, Japan and the UK as banks attempt to boost national growth.
With QE measures likely to continue as markets recover, Tyndall have said it is unlikely that the demand for risky assets and Australian bonds will decline.
"QE is going to mean that risky assets are going to benefit, particularly credit, and we've already seen credit spread come in," Mr Bridges said.
"They're probably going to continue to go in with this flight to yield, but at the same time this sort of flight to yield only really takes place because people are a lot more confident that we're not going to see the risk around bonds."
However, Mr Bridges said that the domestic economy still had massive headwinds with concerns continuing around investor confidence.
"That's why I think the Reserve Bank will delay any rate cuts at the moment, but there is always a possibility that they may cut later in the year, depending on the data," he said.
