The future of fixed income is anything but fixed
From recession to recovery, and whether you’re investing for income or growth, fixed income is a vital part of a diversified portfolio. But today’s unprecedented investment landscape reminds us that the future of fixed income is anything but fixed.
Investment grade credit valuations have come a long way over the past 10 months. At the headline level, we are cautious, but we still see pockets of value.
Investment grade credit valuations have come a long way over the past 10 months. At the headline level, we are cautious, but we still see pockets of value.
Investment grade credit valuations have come a long way over the past 10 months. At the headline level, we are cautious, but we still see pockets of value.
As we take stock of the first few weeks of 2021, we note that some trades haven’t played out as expected. Risk assets have stalled somewhat as they look for a catalyst to take them another leg higher.
Higher inflation looks set to be on the cards in the coming months. While the risk of a taper tantrum-like scenario can't be discounted entirely, we see a gradual rise in yields as the more likely outcome.
While higher US growth expectations may provide a short-term boost to the dollar against some currencies, the US currency’s fundamentals remain challenging longer term.
With positive vaccine sentiment continuing to drive a risk-on mood, emerging markets still look like the place to be.
Gain insights on fundamentals, quantitative valuations, technical and more in the weekly report by the Global Fixed Income, Currency & Commodities (GFICC) team.
Positive vaccine news and a rising stock of negative yielding debt has pushed investors into lower quality credit. Despite the strong run of recent performance, we believe valuations could still have more to offer.
November’s risk-on rally produced strong returns for emerging market (EM) debt, but we think there is still room to run.
Despite a murky fundamental picture in the short to medium term, bond markets are looking ahead to a post-Covid world, with investors appearing to put more chips on the table and position with a risk-on stance.
In our view, emerging market growth, led by China, could reach 6.7% in 2021. A backdrop of easy global monetary policy further supports the case for emerging market assets broadly, with risks to the upside.
After unprecedented global stimulus stabilized economies, what’s next? Many challenges. Still, Above Trend Growth remains our base case at a reduced 60% probability. Our preferences: higher beta U.S. corporates and munis; some local emerging market debt.
After unprecedented global stimulus stabilized economies, what’s next? Many challenges. Still, Above Trend Growth remains our base case at a reduced 60% probability. Our preferences: higher beta U.S. corporates and munis; some local emerging market debt.
Our updated base case view, to which we assign a 60% probability, looks for global growth to bottom out and gradually transition to a shallow recovery. We see only a moderate risk of inflation, as activity and commodity prices remain low. In this core scenario, we expect central banks to remain accommodative, which we think will support emerging market assets.
Our base case scenario remains a “gradual normalisation,” where the global economy slowly exits recession into 2021. China, which is ahead of the rest of the world in this cycle, continues to lead the recovery.
Whether you’re investing for income or seeking diversification and volatility management in a growth portfolio, we have fixed income solutions to help you achieve your goals.
The value of investments may go down as well as up and investors may not get back the full amount invested.
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