Moderating global growth as policymakers grapple with persistent inflation Global economic growth looks likely to continue in 2022, albeit at a more modest pace. The COVID-19 pandemic does, however, add uncertainty to the outlook, as evidenced by the recent emergence
Higher inflation and in some cases, rising inflation expectations, have been a key focus for investors this year, in both emerging and developed markets (DM). This is against a backdrop of large fiscal and monetary stimulus from governments around the
Russia’s military aggression against Ukraine, which has become Europe’s largest ground war in generations, has impacted millions of people and triggered a large-scale humanitarian crisis as vulnerable Ukrainians take shelter or flee their homes. The intensification and spread of the
Emerging market debt (in USD terms) experienced a tepid start to 2022 as a sell-off in US Treasuries put pressure on a range of risk assets. This included EM local rates, depressing both local and hard currency returns. Concerns around
Emerging market debt (in USD terms) experienced a tepid start to 2022 as a sell-off in US Treasuries put pressure on a range of risk assets. This included EM local rates, depressing both local and hard currency returns. Concerns around
Emerging market debt (in USD terms) experienced a tepid start to 2022 as a sell-off in US Treasuries put pressure on a range of risk assets. This included EM local rates, depressing both local and hard currency returns. Concerns around
Fixed Income Perspectives Bond Market Outlook Global Rates: Yields to edge higher driven by ongoing inflation worries and 2022 rate-hike expectations Global Currencies: U.S. dollar to remain range-bound as market balances global Covid concerns, hawkish central bank policies Investment Grade:
5 investment solutions Emerging markets (EM) never fail to present a challenging and diverse investment landscape. While there are always opportunities for alpha generation, not all investment strategies pursue approaches that are likely to be fruitful in today’s climate. Here
“The hawkish December FOMC minutes released in early January suggested rate hikes ‘sooner or at a faster pace’ than previously expected, while also raising forecasted inflation to 2.6% in 2022 — an increase over the 2.2% projected last September. There
Valuations vary 1. Investment grade (IG) sovereign and corporate spreads are well below historical medians 2. High yield (HY) spreads offer more value, especially in sovereign EMD where the dispersion between countries has increased
Uncommon truths It is time to forget central scenarios and think about improbable but possible outcomes. Market sentiment is now mixed (thanks to the Fed), so our list of surprises contains something for everybody (these hypothetical predictions are our views
Macro / government bonds All three major central banks making decisions last week have demonstrated that they no longer regard the downside risks to economic activity over the coming months as outweighing the need to address inflation pressure.
Positive but slower global growth is meeting with greater inflation pressures The global economy maintained its Growth potential is on track to outpace pre-pandemic times positive overall trajectory, though economic indicators grew more mixed. Returns across fixed income were mostly
US FIXED INCOME 2022 OUTLOOK That’s how the 2022 economic forecasts feel when compared to 2021. For ’22, we see real growth running about 4%, or two times trend. That’s typically great performance, but when you’re coming off a phenomenal
In recent years we’ve seen a surge of interest in exchange traded funds (ETFs) as a cost efficient and effective way to try and replicate market index performance. But are ETFs as effective as investors think? As part of our
Executive Summary Improved access for foreign investors to China’s large bond market has started a conversation around the place of Chinese bonds within a global portfolio. Investors are now evaluating whether to make an allocation and, if they do, what
Strategy Summary The FIXED INCOME MONTHLY provides a forward-looking summary of the medium-term views from the Fidelity Fixed Income team. Our investment approach is multi-strategy, with portfolio managers given clear accountability and fiduciary responsibility for all investment decisions in a
Global Investment Views The past weeks have confirmed that phase one of the ‘great recovery’ is now behind us. We have entered a new sequence: PMIs decelerating from their peaks and concerns about the spread of the Delta Covid19 variant
Despite having successfully navigated volatile markets and the uncertain economic outlook in 2020, long-term institutional investors continue to face significant challenges. Surveys show 66% of pension funds consider themselves to be cashflow negative and 53% of those that are cashflow
Interest rate volatility has been the main driver of performance in credit markets over the past couple of months. Heightened inflation expectations drove US Treasury rates sharply higher in March, with 10-year Treasuries reaching levels not seen since January 2020,
These are promising times for emerging markets (EM) debt, as we see a number of macro factors aligning in a broad tail wind for the sector. EM economic growth is leading the global recovery, yet EM is the only major sector with broadly attractive valuations. In developed markets, while rates have backed up from their extreme lows at the start of the year, monetary policies continue to anchor core …
According to the International Monetary Fund (IMF), Emerging Markets’ Gross domestic product (GDP) should reach 6% and 8.2% for China, on the back of vaccine deployments and accommodative central banks. Combined with attractive credit …
Emerging-market economies did not shut down to the degree that occurred in developed-market economies in the face of COVID-19 in 2020, and neither are they are shutting down as aggressively now. While significant growth downgrades for 2020 …
Governments everywhere are racing to lock in historically low borrowing costs by issuing ever longer dated debt – in recent years Mexico and Argentina even managed to sell century bonds. That presents several new challenges for fixed income investors. Particularly those who own …
Beleggers met allocaties naar obligaties uit opkomende markten moeten nu begrijpen wat de werkelijke impact is op opkomende economieën van langetermijnfactoren zoals de klimaatverandering en de ontwikkeling van menselijk kapitaal.
Rising oil prices are front and center of the markets’ narrative at present. What this potentially means for emerging market (EM) countries and how it impacts inflation and—in particular—currencies were …
The stars are aligning for emerging market local debt. The asset class may have been in the doldrums since the global financial crisis, but it is now poised to outperform thanks to a raft of positive factors – from emerging markets’ solid economic fundamentals and undervalued …
More than zero: Using emerging markets bonds to optimise portfolios There are a number of reasons many investors do not yet have emerging markets (EM) bonds in their portfolio, including awareness, understanding and difficulty of access. All of this means
There are reasons to expect a slower and less comprehensive vaccine roll-out among EMs than in richer countries, and the fiscal damage done to already-fragile sovereign balance sheets may increase vulnerabilities. But the steady recovery of the asset class since
The legacy of Covid-19 in emerging markets (EMs) may take some time to become clear. Having lagged advanced economies’ initial surge in cases in March and April, lower income countries experienced highly concerning case growth at the end of the
#EmergingMarketDebt In December of 2020, Capital Group published an outlook for emerging market debt. In this paper the global macro environment and the development of the pandemic are pointed to as the drivers for the returns of emerging market debt
Investment Insights 2020 was a volatile year for emerging markets (EM). EM debt faced underperformance during the first half of the year, a sharp retracement and outperformance relative to developed markets during the early summer, and subsequent bouts of intermittent
December 2020 Emerging-market debt (EMD) continued to benefit from a broad market rally in the third quarter of 2020, with local-currency sovereign EMD, hard-currency sovereign and corporate credit all posting positive returns. We hold a higher conviction for currencies, as
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
Investment Insights Emerging market debt (EMD) has already broadened and deepened significantly in the last few decades and as the asset class has developed, it has become more appealing to a broader investor base. Issuance has increased, thereby improving liquidity.
On the back of a second-quarter rally across emerging market debt (EMD), sovereign bond vulnerabilities still vary signifi cantly by region and country. Lower oil prices offer a boost to oil importers like the Dominican Republic, but if prices fall
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
Emerging-market (EM) debt rebounded strongly in the second quarter across hard currency sovereign and corporate credit as well as …
While the coronavirus has dealt a painful blow to many of the emerging-market economies, we see the challenges arising from this episode as only one of several sets of factors likely to determine EM vulnerability and performance over the medium
The second quarter represented a dramatic rebound for financial markets, including emerging markets, after the severe sell-off in March. While COVID-19 continues to pose a generational challenge to the world and the lives and livelihoods of some of the world’s
We still believe that there is good value across a range of emerging market (EM) debt assets – in absolute terms and relative to other fixed income asset classes Emerging market debt is unlikely to face a broad EM debt
Key takeaways The impact of the recent volatility has varied greatly within emerging markets, particularly between the investment grade and higher yielding parts of the asset class. This has been reflected in the differences in yields in local and hard
Webinar – Emerging Market Debt As uncertainty continues to cloud global markets, Finisterre Capital’s Damien Buchet, CIO Total Return Strategy, will share his outlook for emerging market debt and his expectations for the short and medium term. He will discuss
Investment Insights – Q&A In this Q&A, Capital Group fixed income investment director James Blair discusses the characteristics of emerging market debt, how investors could approach investing in the asset class and the US Federal Reserve (Fed)’s policy response to
Webinar – Emerging market debt: How will emerging market debt emerge from this crisis? With COVID-19 impacting markets and economies globally, EM debt is set to be impacted from the increased volatility. Join us to hear from Kirstie Spence, fixed
Frontier debt markets: a growth story After significant growth over the last decade, we believe that it is time for global investors to start considering EM frontier debt as a stand-alone investment opportunity. All of the traditional arguments for allocating
Webinar – Emerging Market Debt Local Currency: “the good, the bad and the ugly” The safety flight into US dollars comes without surprise, especially with the verdict not being out about the economic and human impact of the COVID-19 virus.
While much uncertainty remains, one aspect of the COVID-19 market shock is clear: The Fed will not stand in the way of the economic recovery. By the end of March, the COVID-19 global pandemic had a deep and profound effect on virtually
We downgrade emerging market (EM) local debt to neutral on currency concerns, but still like Asia ex-Japan equities and credit. U.S. stocks extended gains, brushing off poor economic data including a collapse in retail sales and China’s GDP contraction. This
Webinar – Uncovering value in Emerging Market Debt The dramatic global liquidity and confidence shocks related to the spread of COVID-19 and the decline in oil prices caused a fast and intense sell-off: a market combination impacting especially emerging markets’
