Investment Grade Quarterly Update – January 2025
In what has been a busy start to 2025, TwentyFour Asset Management’s Gordon Shannon looks back on the final quarter of 2024.
Key takeaways
Investment grade market performance
- Q4 2024 saw a rise in government bond yields driven by persistent inflation and stronger-than-expected US economic data.
- UK gilts were hampered by concerns over projected borrowing in the October budget, leading to reduced expectations for central bank rate cuts in 2025.
Market outlook
- We think rates volatility will remain high due to sticky core inflation limiting central bank actions and unsustainable global government deficits.
- However, a key theme for 2025 will be carry, with high starting yields and carry helping to generate positive returns through 2024, we expect a similar result this year.
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