Fixed Income Boutique

How 5G will create the yield ice age


We all want the best for our children and one major factor in anyone’s lives is their career. But what kind of careers await our offspring? Automation is changing the global job market and traditional jobs are disappearing. Now, in 2020, the pace of change is accelerating due to a leap in digitalization thanks to the arrival of 5G. While many jobs will disappear, even the cognitive jobs that remain will be transformed. It’s not just industrial jobs that are affected, take the traditional job of a doctor, for example, where 5G connectivity is going to change the healthcare industry.

Right now, ambulances connected to a 5G network are part of a pilot project in Barcelona. Equipped with cameras and sensor monitors that show the patient’s vital signs, a live video stream connects to the hospital, where specialist doctors can remotely instruct the paramedics on the best care for the patient, thus substituting their function. This way the patient receives the required and immediate doctor attention within the ambulance, instead of being treated at the hospital upon arrival, as it was the case not so long. The implication of this is that the number of emergency practitioners at the hospital will eventually decrease as this technology is rolled out.

The point here is that 5G connectivity will not only save lives, it will change our lives as a society: how and where we work, study, and play. With such an all-encompassing effect, 5G will have powerful ramifications on the global economy. From an investor’s viewpoint, these effects will result in low interest rates for a very long time, if not forever. The 5G world is a low yield world. To understand why this is, we have to understand what brought us here and how we, as bond investors, can continue to generate returns in this sub-zero yield environment.