Multi-Sector Bonds

For any fixed income investors that follow the England football team, the plan for H2 2024 may feel somewhat familiar – no substitutions in the second half.

For the fixed income fanatics amongst us, June was always going to be one for the books with all three of the major central banks meeting, elections, and continued data.

The European Central Bank (ECB) will almost certainly start their rates cutting cycle next month. Supportive inflation data and clear guidance from the governing council has driven market implied probabilities of a June cut to almost 100%, with little in the way to derail that.

The term ‘fossil fuel financing’ refers to the provision of capital (including loans, investments, and other forms of capital) to companies involved in the exploration, extraction and production of coal, oil and natural gas.

In this Back to Basics webinar, Jakub Lichwa (Portfolio Management) from our Multi-Sector Bond team gave their valuable insights into the importance of maintaining sufficient levels of bank capital to uphold financial stability.

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.  

After what can only be described as a relatively dire year for fixed income in 2022, during which spiralling inflation led to one of the most aggressive rate hiking cycles on record, we believe the market for bonds is now looking much healthier.

Since the last Federal Open Market Committee rate decision on September 20, rates markets have sold off very aggressively. And, despite rates being left on hold, the hawkish message, which included the possibility of another hike this year and less cuts next year than previously forecast, was one of the key contributing factors behind the ~55bps increase in the 10-year treasury in the 10 days following that meeting.

Eoin Walsh shares his thoughts following last night's statement from the Federal Reserve, concluding that for now while treasury yields aren’t helping, credit looks attractive based on the rosy economic forecasts.

Felipe Villarroel shares his thoughts on the recently released preliminary PMI data, which he concludes is a reminder that the hiking cycle only started 18 months ago and there are lags that are yet to be felt in the real economy, reiterating some of his previous views.

An interesting debate, and topic that is attracting plenty of headlines given the recent volatility is where Treasury yields will ultimately settle, with a renewed focus on the neutral rate. Eoin Walsh explores the previous movements of Treasury yields and what Powell is likely to say at Jasckon Hole.

Bank bonds have been amongst the best performing asset classes in fixed income over the last few months, doing their bit in proving their strength.