CROSS ASSET Investment Strategy While a global recession may be avoided, we are likely to see growth deceleration and high inflation (higher cost of living) along with regional divergences. Thus, investors should consider moving to a more cautious stance on
Green Bonds KWARTAALUPDAT Een obligatie is niet zomaar ‘groen’ te noemen. Om dit predicaat te mogen dragen, moet een obligatie aan verschillende criteria voldoen. Een dubbelinterview met een uitgever én een belegger wijst bovendien uit dat er meer is wat
It Fooled You Once… Coming out of the annual Jackson Hole meeting, Fed Chairman Jerome Powell’s speech, unsurprisingly, had a strong tone reinforcing the Fed’s intention to fight inflation at any cost, a 180-degree reversal of his ‘inflation is transient’
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. Yield curves
De ontwikkeling van de reële obligatierendementen en de break-evenrentes op inflatiebeschermde obligaties geven aan hoe de rest van de vastrentende markt zal presteren. Dat is nu bijzonder relevant. Reële rendementen zijn altijd belangrijk. Maar obligatiebeleggers besteden best extra aandacht aan
2022 has been one of the most volatile periods in recent years for global equity and fixed income markets. The outbreak of the war in Ukraine, global supply chain disruptions, global inflationary pressures, less accommodative central banks and COVID-19 restrictions
In een verder ongunstige omgeving voor obligatieemittenten en -beleggers ziet de toekomst voor obligaties uit opkomende markten er zonder twijfel groen uit. Stijgende wereldwijde rentes en volatiele markten hebben zwaar gewogen op zowel het aanbod van als de vraag naar
Een zachte landing van de wereldeconomie lijkt steeds onwaarschijnlijker. Dat betekent dat risicovollere activaklassen nog verder kunnen dalen. De stijging van de aandelenmarkten die begon met de hittegolf deze zomer is volgens ons voorbij. Vanaf nu zullen de omstandigheden waarschijnlijk
We expect the second half of 2022 to present the same macro headwinds that posed a challenge in the first half: inflation, aggressive central bank action, growth concerns and wavering sentiment. Broadly, the pace and aggressiveness at which central …
Q&A with Rob Neithart With yields at historic levels in high yield and emerging market debt, seasoned portfolio manager Rob Neithart discusses how he is approaching the key risks and opportunities in markets today. He also explains the process behind
Quarterly Fixed Income Perspectives from Capital Group’s fixed income team: The combination of persistently high inflation, aggressive central banks and tightening financial conditions is weighing on financial markets and global growth outlooks. While valuations across many sectors look compelling after
May’s reprieve proved short-lived as recession joined inflation fears pushing equity/bond prices lower in June. Concerns have risen as the increasingly hawkish Fed rhetoric at its June meeting suggests a willingness to trade rising …
2022 has not been a great time for bonds. The Bloomberg Global Aggregate Index and Bloomberg US Treasury Index both hit historical lows, returning -13.9% and -9.1%, respectively, in the first 6 months of 20221 . Meanwhile, risky asset classes
As investors increasingly look to manage the carbon exposure in their portfolios, it is critical that they have the right tools. There are many ways investors can address the carbon exposure in their portfolios, including explicit …
EMEA-Listed ETF Flash Flows – Weekly as of 19 August 2022 ETFs experienced strong inflows last week, adding $3.8bn. Equity led with net inflows of $3.3bn while Commodity lost …
In the wake of an unprecedented economic cycle, we have noticed an uptick in investor questions regarding direct loans. Supply chain imbalances, higher raw material costs, rising interest rates, labor shortages, and geopolitical risks each contribute to business risk— and
Stijgende wereldwijde rentes en volatiele markten hebben zwaar gewogen op zowel het aanbod van als de vraag naar obligaties, vooral in opkomende markten (EM). Toch bleef één segment verrassend veerkrachtig. Uit onderzoek van Pictet Asset Management blijkt dat obligaties die
Emerging market (EM) bonds are a strategic holding for many investors. But the desired result from an allocation to emerging market debt cannot be achieved without first considering the attributes of hard- and local currency-denominated bonds — the two broad
When Volatility Overstays Its Welcome, Opportunity Knocks Like many other market participants, we’re laser focused on inflation in the second half of 2022. While the July inflation reading came in below expectations, our optimism remains tempered. Much of the decline
Market Themes Whatever It Takes 2.0 Keep On Smiling
Investors are witnessing unprecedented market conditions. Within a turbulent market environment charaterised by a high inflationary pressure, a shift from global to “glocal” trade patterns and a fading era of cheap energy, how can an active and agile multi asset
It was a bruising first half of the year for financial market participants, with U.S. and global stocks entering bear market territory while core bonds, generally considered “safe-haven” assets, declined by double digits. Russia’s war on Ukraine continues to warp
Sovereign ESG revisited Introduction Although the use of sustainability metrics in sovereign fixed income markets is becoming more mainstream, there is a lack of consensus on how to appropriately assess countries’ Environmental, Social and Governance (ESG) performance. A particular challenge
When describing credit markets, investors and investment managers often define the available universe as synonymous with the public bond markets (and, perhaps, middle market and other leveraged loans). Seemingly unnoticed by investors, however, is that the allocation and provision of
Stock-Bond Correlation Synchronicity Looking across six DMs (Australia, Canada, Germany, Japan, UK, and US), we observe that changes in local currency stock-bond correlations are synchronized (Figure 1).2 Indeed, the correlation of DM local currency stock-bond correlations with US stock-bond correlation
Abstract The most common models to assess asset returns are a linear combination of risk factors. We have employed tree-based machine learning algorithms to capture nonlinearities and detect interaction effects among risk factors in the EUR and USD credit space.
As shown in the following graph, fixed income markets have experienced one of the most, if not the most, turbulent period in history. To put it in perspective, US Treasuries returned -9.1% during the first six months of 20221 ,
High yield bonds are frequently misunderstood, with an undeserved reputation for being high risk. We view them as a hybrid asset class, sitting between equity and traditional debt markets. In our view, high yield bonds exhibit compelling …
Summary Hard currency emerging market debt (EMD): – Valuations vary: 1. The spreads of investment grade (IG) sovereign and IG corporate indices are close to their historical medians. High yield (HY) corporate index spreads have inched slightly above the historical
Market Perspective Inflation concerns remain at the forefront for central banks and investors as global growth continues to trend lower amid supply disruptions, geopolitical challenges and reduction of liquidity, setting the stage for a challenging macro backdrop. The US Federal
Voya Multi-Asset Perspectives | 3Q22 It was a bruising first half of the year for financial market participants, with U.S. and global stocks entering bear market territory while core bonds, generally considered “safe-haven” assets, declined by double digits. Russia’s war
Private credit continues to attract investor attention Within the alternatives category, private credit has seen significant inflows for much of the past decade and the largest increase in investor holdings year over year. Recent events have only added to the
CROSS ASSET Investment Strategy: The current repricing is a reminder of a regime shift in which stagflationary concerns are becoming prominent. Investors should move towards quality segments in credit and equities, and aim to benefit from the regional divergences that
The alternative fixed income asset class is highly diverse, embracing private debt, consumer loans, mortgage investments, insured loans, loans to small and medium-sized enterprises (SMEs), infrastructure debt and asset-backed securities (ABS). These assets can offer enhanced yields compared to government
Following yesterday’s stronger than anticipated Eurozone inflation print, coupled with recent comments from various ECB members including President Lagarde, Vice-President de Guindos and Chief Economist Lane, the European Central Bank are expected to increase interest rates in July, the first
Market views from BlackRock Systematic Investing: Central bankers across the world are facing a “Jaws”-sized inflation problem. Like Roy Schneider’s character in the shark-themed summer movie classic, they are now realizing they are going to “need a bigger boat” to
Zelfs als de aanhoudende sell-off op de aandelenmarkten de waarderingen naar niveaus brengt die niet stroken met de fundamentals, zijn er goede redenen om onderwogen te blijven in aandelen en hoogrentende obligaties.
Key takeaways TIPS can help investors maintain their purchasing power in inflationary periods, because their principal value adjusts with changes in the Consumer Price Index for All Urban Consumers, providing a real rate of return that exceeds that of nominal
Drivers and Implications The relationship between stock and bond returns is a fundamental determinant of risk in traditional portfolios. For the past two decades the stock/bond correlation has been consistently negative, and investors have largely been able to rely on
It is no secret that 2022 has been challenging for fixed income investors. High inflation and the US Federal Reserve (Fed)’s initiation of interest rate hikes have weighed on markets. Nevertheless, the broad credit universe provides ample opportunities for investors
Spain’s public finances and the trajectory of Spanish debt: The debt/GDP ratio rose to 120% in 2020 after the shock of the Covid-19 pandemic. The country’s debt and deficit sustainability face two main headwinds: a more adverse funding profile due
Last month, we noted the end of an era. After more than a decade, the market’s main measuring stick for macroeconomic risk shifted from what the Federal Reserve might do, to what the Fed will be forced to do. It’s
It has been a rocky start to the year for credit in 2022, with both year-to-date total and excess returns being starkly negative. What started as a duration-driven selloff has been exacerbated by macro headwinds including high inflation, the Russia-Ukraine
Dear Mr Draghi, After a busy couple of months leading a fractious Italian government through various crises, you must be looking forward to a well-deserved summer holiday. Before you and your team leave for the beach, the ECB is preparing
The extent of the Q1 drawdown in fixed income markets was both large and rare relative to history. The aftermath of the pandemic and the conflict in Ukraine propelled inflation in developed markets around the world to multi-decade highs. In
Last year global sustainable debt issuance hit a record of over $1.4tn, with the overall sustainable debt universe expanding to near $3.4tn. In the first quarter of 2022 this healthy trend halted temporarily, as high energy prices and rising borrowing
Overview It gives me great pleasure to introduce our ninth Secular Outlook. T he next five years will be an uphill struggle for investors. High public and corporate debt levels, labour shortages, potential tax hikes and increased levels of state
De vastrentende markten zijn steeds volatieler geworden, een trend die zich waarschijnlijk zal voortzetten. Beleggers moeten zich aanpassen. De recente stijging van de obligatierendementen heeft beleggers in vastrentende waarden doen opschrikken. Eén benchmarkindex voor obligaties tekende, ten opzichte van de
Obligaties uit opkomende markten werden getroffen door inflatie, renterisico's, een stijgende dollar en geopolitieke spanningen. Maar de bezorgdheid over wanbetaling is overdreven. Beleggers in obligaties uit opkomende markten hebben zelden te maken gehad met een meer complexe economische en geopolitieke
For most risk assets, total return is achieved predominantly via capital price return, but not in high yield. Over long-term periods, income tends to drive the bulk of the total return for high yield bonds. In fact, over 100% of
