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.
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.
With positive vaccine developments presenting an eventual pathway out of Covid-19 restrictions, fixed income investors may find value in emerging market currencies (EMFX).
While the announcement of an effective Covid-19 vaccine has shifted the economic and rates outlook higher, the impact of rising yields will be felt differently across bond markets.
Heading into the US election, market consensus was for a ‘blue wave’. As the likelihood of this outcome fades, the hunt for yield looks to be here to stay.
While the course of the Covid-19 pandemic continues to cause great uncertainty, could volatility in European high yield spreads present an opportunity for fixed income investors?
Markets continue to be focused on further fiscal stimulus in the US and progress toward a Covid vaccine. Do these two potential risk-on catalysts signal the end of the bond bull market?
With markets increasingly expecting Joe Biden to win the US presidential election and the Democrats to take control of the Senate, should investors be moving to lower their duration positioning?
Market volatility has proven short-lived for investment grade credit markets. With retracements in index-level spreads happening so quickly, where can investors find value?
One of the primary motives for investing in fixed income is the ballast it has historically provided to an overall investment portfolio. But as yields continue to march lower, do core bonds still offer this portfolio hedge?
Risk markets marched higher over the summer, but now that the recent period of low volatility returns has come to an end, could a widening in high yield bond spreads represent a buying opportunity?
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.
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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