Something very odd is happening in the bond markets. At a time when risk aversion is at the forefront of investors' minds, they are piling into junk bonds in such volumes that they have squeezed yields down by around a third since October 2002.
That means that they are paying to take on risk - a peculiar strategy when they are abandoning the risky equity markets.
Confused? You should be, because one of the strangest aspects of this is that the forces producing this trend are contradictory.
New research from RiskMetrics, a New York-based risk analysis firm, shows what many market participants may have suspected for some time. Based on data drawn from thousands of different bonds, the analysis creates yield curves based on the credit rating of the underlying assets. The data covers US bonds only, but the pattern is likely to be repeated elsewhere.
The graph based on this sets the risk-free investment rate as zero and plots the securities' premium over that. And the results are striking, with the yields on riskier credits shrinking rapidly.
"This story is starting to get people really concerned," says Mike Thompson, risk analyst at RiskMetrics.