The TwentyFour Blog

As we approach the end of the Q4 2024 earnings reporting season for banks, most are now out of their “blackout” periods which means bond issuance has resumed. Wednesday was an active day in primary markets with a couple of deals that are worth commenting on.

Markets had their first taste of Trump Tariffs 2.0 on Monday after levies on Mexican, Canadian and Chinese exports were announced over the weekend.

Federal Reserve (Fed) chair Jerome Powell had the honour of kicking off the 2025 season for the major central banks this week, swiftly followed by the chore of having to plead the fifth every time he was asked about a President Trump policy.

It has been two weeks since the primary market for collateralised loan obligations (CLOs) re-opened and 2025 has already proven to be quite a year from multiple angles.

Much of the discussion around inflation over the past few months has centred on the potential for US tariffs, a focus that has only intensified following Donald Trump’s inauguration.

One of the key reasons we see credit continuing to outperform government bonds over the medium term is corporate fundamentals.

Global rates markets rallied sharply on Wednesday after fixed income investors received some long-awaited good news in the shape of Consumer Price Index (CPI) data for December, which came in below consensus in both the US and the UK.

Last week Fitch Ratings published a report concerning asset performance deterioration in UK residential mortgage-backed securities (RMBS) originated prior to the global financial crisis (GFC).

The latest non-farm payrolls (NFP) data on Friday showed ongoing resilience in the US labour market. To quote the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, “the labor market seems to be stabilizing at something close to a full employment rate.” Is he right?

The Net Zero Banking Alliance (NZBA) has been the flagship climate initiative for banks to advertise their commitment to aligning their investment and lending portfolios with net-zero targets by 2050 or sooner. However, in recent weeks the NZBA has been hit with the withdrawal of all its major Wall Street banks.

Last week’s rise in UK government bond yields prompted the bonds of UK financial institutions, both banks and insurers, to underperform other regions, a trend also seen in the equity market.

We saw a sell-off across the UK Gilt curve on Wednesday with yields rising by 4bp at the short end and 11bp at the long end. This took the 10-year Gilt to 4.80% and the 30-year Gilt to 5.35%, with the latter bringing the unwelcome headline that UK borrowing costs are at their highest since the last century.