Steady as she goes…
In credit: We saw some key economic data last week, in what felt like a seasonal lull for a number of European countries given the late May bank holiday and a week of school holidays. In the UK, sterling hit
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Tag "credit"
A farewell to negative yields?
In Credit: US bond yields have stabilsed this quarter after the material sell-off in the first quarter. It has been a different story for yields in Europe, however, which have trended higher. This reflects a heavy supply schedule and speculation
Breaking Bad.
In Credit: The key theme this year for markets has been the trend higher in inflation expectations and the question of whether the US economy is overheating. This has prompted a rise in government bond yields, with German and UK
‘Brass in pocket’
In Credit: The upward trend of rising inflation expectations continues and is now at 2.5% at the 10-year point of the curve and 2.8% for two years. The US non-farm payroll / employment sector report released last Friday revealed that
All standstill.
In Credit: Government bond yields were little moved last week. The benchmark US 10-year note ended the week with a yield of 1.58%, barely moved from a week earlier. Inflation expectations, which have risen materially in the last year and
Great Expectations.
In Credit Inflation arrived in the US last week. There was also a bumper crop of strong economic data releases. This had been largely expected and remarkably yields fell to the lowest level in a month with the US 10-year
Calm after a storm.
There has been a degree more stability or calm in core government markets over the last couple of weeks. This comes after a very difficult start to the year, especially in the US.
Diversifying Credit Portfolios With Multi-Factor Strategies
The past decade has seen the use of multi-factor investing in corporate bonds increase significantly. Easier access to corporate bond data along and a growing body of research has enabled managers to develop robust factor-based …
It’s my party and I’ll wait until I want to..
Core government bond yields were lower and curves were flatter after a volatile week which, at one point, saw US and Europe diverge with US treasuries bear steepening while European government bonds experienced a bull flattening on Wednesday. Markets were caught between inflation concerns …
Inflated inflation fears
For bond markets, this year has been all about rising inflation expectations and more recently real yields. This has pushed yields higher and dented total returns for areas of fixed income with higher levels of interest rate risk. The effect such moves have depends on the interest rate sensitivity (duration) of the …
Why Credit Investors Need to Become Active Duration Managers
Why Credit Investors Need to Become Active Duration Managers The importance of duration for credit performance and five ways to improve it. Credit investors typically pay little attention to duration, seeing themselves primarily as bottom‑up investors who specialize in sector and
Back to work
As mentioned previously, this trend was borne out of rising inflation expectations and augmented by a nudge higher in real rates. If this latter rate is the key discount rate for risk markets such as equities, it helps explains why this market has been …
Podcast: The US economy and the USD credit market are in a stronger position than the euro area
A pick-up vs. EUR-denominated investment grade bonds of +110 bps, investors lock-in a higher yield in the USD market as hedging costs to EUR remain low …
Unearthing opportunities among EM corporate debt issuers
By nature, the emerging credit market has lower exposure to Covidsensitive sectors (retail, airlines, hospitality, etc.) than its developed markets (DM) peers. This may partly explain why the 2020 default rate …
Reflating a bubble
It was Presidents Day in the US on 15 February and we imagine ex-President Trump will be celebrating more than most after being acquitted in his second impeachment vote. There was, however, less to celebrate in government bond land.
Less interest, in negative interest rates.
Less interest, in negative interest rates. Markets at a glance – 8 February 2021 It was a game of two halves for macro markets last week. Italy won in the end, with the UK coming last. For Italian bonds, spreads
‘Blue Wave’ and Crypto in our Best Read last week
Columbia Threadneedle Investments provides readers with an in-depth discussion of fixed income assets. One important takeaway is the Biden presidency causing rising inflation expectations.
End of the Fed’s Credit Support Facilities Is Positive
The success of the Federal Reserve’s emergency intervention in March 2020 played a crucial role in stabilizing and improving liquidity in U.S. credit markets. The cessation of the Fed’s corporate credit facilities, in our opinion, lowers the risk of unintended imbalances within credit markets that could potentially …
The Future in Focus
The Future in Focus Pivoting from uncertainty to opportunity. The past 12 months have tested the world in ways that were hard to imagine last January. What started as a solid year for equities was turned upside down as the
“Turning to the tasks of our time”
“Turning to the tasks of our time” Joe Biden, 46th President of the United States Markets at a glance President Biden kicked off his new term with a flurry of executive orders and directives (30) in his first three days
Euro high yield: the opportunity today
Euro high yield: the opportunity today Credit Outlook The upheavals of 2020 have brought structural changes in the euro high yield (EHY) bond market. So, what has changed, what still applies, and what role can this sector play in European
Brightening Outlook Propels Credit Market Rally
Brightening Outlook Propels Credit Market Rally Fixed Income Asset Allocation Insights Credit markets continued to rally into December, and valuations now fairly reflect optimism that we are firmly on the path toward economic and earnings recovery. While these conditions would
US bond yields buoyed by the ‘Blue Wave’
US bond yields buoyed by the ‘Blue Wave’ In Credit As the US Political landscape evolves (after Democratic Party victories in Georgia) and the risk of increased (bond-financed) government spending grows, US bond yields have also risen materially. This is
Here we go again
In Credit – Here we go again 4 January 2021 It was a quiet end to the year for government bond markets with yields little changed. The resolution of the Brexit negotiations was widely anticipated and there was little impact
Investing in EM corporate bonds for income and diversification
Using credit in asset allocation Investing in EM corporate bonds for income and diversification In asset allocation, emerging market (EM) corporate bonds can be used to help investors achieve a range of objectives, in a range of market environments. In
Uncovering Opportunities in Noninvestment‑Grade Credit
T. Rowe Price Insights on Global Fixed Income Credit analysis can reveal value in bank loans, high yield bonds High yield bonds and bank loans (or leveraged loans) represent two forms of noninvestment‑grade credit exposure. Both sectors have various strengths and risks
Credit investing roadmap for 2021
Outlook If, like a modern-day Rip Van Winkle, you had magically slept through 2020 and then looked at the year-to-date credit returns, you might have thought: “Quite a boring year, then”. Dramatic selloffs have been largely retraced by equally dramatic
Elections and a vaccine: Implications for fixed income investors
Investment Insights The US election results and the announcement of a potential COVID-19 vaccine from Pfizer have been pivotal events in markets, initially providing a substantial boost to risk assets. Mixed economic data and a rapidly rising rate of coronavirus
‘It’s inflation Jim – but not as we know it’.
In Credit There were two clear themes unfolding in macro markets in the last week. The first is rising inflation expectations and the second is a lower US dollar. In a period when the quantity of money (money supply) has
T. Rowe Price – Webinar – 2021 Global Credit Outlook with Justin Gerbereux
Webinar – 2021 Global Credit Outlook with Justin Gerbereux Not since the Global Financial Crisis have corporate bond investors faced such a rollercoaster of selloffs and rallies, not to mention a wave of ‘fallen angels’ and credit defaults. As we
Capital Group Global High Income Opportunities (LUX) (GHIO) Q&A with Rob Neithart
Q&A with Rob Neithart, Fixed Income Portfolio Manager Based in Los Angeles We have experienced an extraordinary year so far. How did GHIO navigate the volatility and what have you done in the portfolio since then? Going into the period of
More fallen angels ahead in Europe?
“Global default rates are rising and likely to continue into 2021. But we think the full impact may be muted by the significant fiscal and monetary intervention seen from governments and central banks.”
Flash Update – Investment Views
Global & Absolute Return Fixed Income For Professional Investors in Switzerland or Professional Investors as defined by the relevant laws Key takeaways: ■ The outcome of the US elections has reduced hopes of a large fiscal package being passed next
COVID-19 has transformed the US high yield opportunity set
Credit Outlook Downgrades and defaults have had a major impact on the asset class Record volumes of credit downgrades and a sharp spike in defaults have reconfigured the US high yield bond market in the wake of the coronavirus. This
CIO autumn update: Endurance test
Change may be the only constant over the coming months. We believe investors will need to be dynamic in striking a balance between managing risks and seizing opportunities. Since we published our last outlook, many of the dynamics we observed
Strategic credit: a nimble approach for an uncertain world
Active Credit Allocation in Portfolios Jon Mawby discusses the advantages of active credit allocation in portfolios now that government bonds no longer serve their traditional purpose. Governments have launched massive efforts to underpin their economies in the wake of the
Accessing Dislocated Corporate Credit in Emerging Markets
Over the last five months, market participants have been following the COVID-19 pandemic as it has evolved into a global health crisis and forced various forms of lockdown across the world. The next 12-18 months …
Rising debt, weak growth highlight active selection
Winners vs. Losers in Credit The extraordinary monetary and fiscal policy measures enacted during the pandemic have added further impetus to the trend of rising corporate debt and less stringent lending standards that began in the aftermath of the global
Changing credit views amid volatility
Weekly commentary Markets have rallied sharply from their virus lows, driven by the policy revolution and economic restart. Tighter valuations increase the risk of volatility, particularly ahead of divisive U.S. elections. Last week’s equity selloff illustrates this. Against …
Downgrades, defaults and dispersion: Covid and credit
Markets reacted violently as global economies adopted shelter-in-place policies to combat the spread of Covid-19 earlier this year. Corporate bond credit spreads (or risk premiums), driven by heightened uncertainty and revenue pressure, widened dramatically to reflect the increased risk …
Downgrades, defaults and dispersion: Covid and credit
Markets reacted violently as global economies adopted shelter-in-place policies to combat the spread of Covid-19 earlier this year. Corporate bond credit spreads (or risk premiums), driven by heightened uncertainty and revenue pressure, widened dramatically to reflect the increased risk of
Conviction edges up for emerging-market credit
Emerging-market (EM) debt rebounded strongly in the second quarter across hard currency sovereign and corporate credit as well as local-currency debt. We believe the market has entered a new phase following the broad-based recovery in the second quarter that will
Credit enjoying the summer lull
In Credit Core government bond yields were marginally higher with the rise in risk sentiment. Non-farm payroll in the US hit a three-month streak of positive gains, with jobs rising and unemployment falling more than expected (rate now 10.2% vs
Conviction edges up for emerging-market credit
Emerging-market (EM) debt rebounded strongly in the second quarter across hard currency sovereign and corporate credit as well as …
Review of markets over the second quarter of 2020
Market Review It’s been a very strong quarter for equities and credit as central banks and governments provided enormous amounts of stimulus and economies started to reopen. Despite the strong rebound in risk …
Why we like credit
Weekly commentary We recently moved to a strategic overweight on credit after being underweight for the past year. Cheaper valuations compensated for the risk of corporate defaults and downgrades in the wake of the Covid-19 pandemic, in our view. We
Post Covid-19 recovery signals a more complex market
H2 Outlook As we emerge from the Covid-19 shock, we expect market developments to eventually become more complex. In the next few weeks, the easy part of a post Covid-19 recovery will be over and by then credit and equity
Road to Recovery
Credit Continuum Monetary stimulus measures and high levels of cash continue to support spread tightening between now and year end. The rally in credit markets has continued in May given Federal Reserve and European Central Bank support measures and the
What shape recovery?
In Credit It was a week of data releases and an opportunity to get a glimpse as to whether an economic recovery is underway. The evidence would so far suggest that this …
Credit Guarantee Feedback Loop
Key points The gap between the US and Europe on the pandemic front is getting wider – the US responds to market wobbles by more stimulus announcements. We explore the “feedback loop” between state guarantees to business loans and fiscal
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