Investment Grade

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

While bonds are once again finding their feet, investors have found themselves sitting on cash balances of 30% to 50%. This capital preservation trade has made perfect sense, but does it still make sense as we reach terminal rates?

It is our view that without a doubt 2022 was a year to forget for the bond market. Whether you held government bonds, high end corporate credit or riskier high yield paper, you would have taken a knock as steep increases in interest rates across the globe sent bond prices tumbling. 

As mid-year investment bank reviews hit our screens, we are seeing a shared expectation of spread decompression between IG and HY bonds, signalling rising defaults. Pierre Beniguel argues that tightening HY spreads and resilient performance suggest surprising sector support due to lower issuance and available cash.

In recent weeks the US debt ceiling has been dominating headlines with investors focused on the imminent threat of a US default which would be extremely unnerving for global markets. We look at the wider implications facing the US economy.

Following higher than expected inflation data in the UK, Gordon Shannon looks at the knock on effects within the Gilt market and the increased pressure on the Bank of England.

Despite the recent volatility in the banking sector, corporate credit has remained strong. Pierre Beniguel looks at the interesting rating action which caught attention last week.

2022 was the worst year for bonds in living memory. So, could 2023 be similarly bad for other asset classes? Chris Bowie looks at the case for short dated investment grade credit for 2023.

February was a nasty throwback to the sort of market conditions that battered fixed income in 2022, but the pull-back has given anyone worried they’d missed the January rally an even better opportunity, says Charlene Malik.

With UK consumers holding on to more of their pandemic-era savings than their US counterparts, Felipe Villarroel looks at what it means for bond investors.

While yields have soared in recent months and created a broad buying opportunity in fixed income, Aza Teeuwen says investors should look at floating rate bonds to benefit from higher coupons today.

With projections for European growth and inflation being hastily revised in early 2023, the region’s bonds are still paying investors a premium that may not be around for long, says Dillon Lancaster.