Why BoE Hiking First May Be Best for Bonds
In the last month, global government bond curves have had a torrid time, with significant steepening seen across US Treasury, UK Gilt and German Bund yields.
Insights Topic
US
Stagflation – Probable or Panic?
Our base case is for a continuation of quite high growth and a modest inflation overshoot. For bond investors, positioning for stagflation could be a dangerous trade if that base case bears out
The Conditions for Tapering Already Exist
With ample job openings, inflation well ahead of target, financial conditions that are certainly not tight and strong economic growth, the obvious question is what does the Fed need to see to finally start tapering its asset purchases?
For Bonds, Q4 Will Present Similar Challenges to Q1
As we rapidly descend upon the fourth quarter of this extraordinary year, we think some of the risks fixed income investors faced back in Q1 will rear their heads again before the end of 2021.
Markets Rangebound For Now
As the Delta variant establishes a hold in many countries, forcing some governments to re-assess reopening policies, the market is beginning to feel its impact. The implication on growth remains unclear, but early indications suggest the growth rate may have peaked for this year, albeit continuing its recovery.
Don’t Fight the Fundamentals on US High Yield
When combined with other prevalent market dynamics, the favourable ratings trend paves the way for a highly supportive fundamental terrain as we advance through the cycle and one that is ideal for portfolio managers selecting credits.
Investors should remember – Powell is not a bond manager
It feels like we are currently spending at least 40% of our time talking about inflation, or more accurately, why the US Federal Reserve seems to have a different view of inflation to almost everybody else.
Is the Fed behind the curve on inflation?
In this video, TwentyFour CEO Mark Holman joins Tom Porter to decipher the Fed’s latest messaging, and to remind bond managers that Jerome Powell is not one of them.
Should We Fear the Repo Men?
Given the magnitude of the amounts involved we do think there is potential for some temporary volatility in the US Treasury market as the volumes change. We will be keeping a keen eye on both in the months ahead.
US Banks Pass Their Health Check
Yesterday the US Federal Reserve released the results of its annual bank stress test, subjecting the 23 largest US lenders to a punitive set of scenarios. Some observers might think the events since March 2020 had been sufficient to test the resilience of the banks, but the Fed went beyond this recent real-life challenge and tested bank balance sheets against a range of hypothetical crises.
FOMC: Taper Talk and Treasury Tumble
With all of the recent data pointing to higher inflation expectations and the Fed expected to maintain a transitory interpretation, we will be focusing our attention on comments from the various regional Fed presidents on conditions that could prompt a tapering move at some point in the future.
Fed Sales a Drop in the Bucket, but Watch the Ripples
While we don’t expect any material spread widening in the near term, we remain extremely wary of higher duration bonds given our view that the potential persistent inflation suggested by recent data isn’t priced into US Treasury yields, which currently sit around 1.58% at the 10-year point.