Fast Moving Cycle
As we have said many times over the past few months, this cycle is likely to be remembered (among other reasons) as being exceptional for its unprecedented momentum.
Insights Topic
TwentyFour Blog
Why We Are Now More Bearish on US Treasuries
The biggest mover so far this year in fixed income markets has been US Treasuries. The curve has bear steepened, with the short end remaining unchanged while longer maturities have sold off by anything between 10bp at the five-year point of the curve and just over 20bp in the 30-year.
January Sales Suggest Continued Credit Squeeze
While we enter 2021 with plenty of negative headline news on the virus, along with the associated inevitable downgrade or delay to the economic recovery, in our view the technical position remains just as firm as it has been in the last nine months.
Distribution Support for AT1s
Yesterday the ECB released their guidance to banks regarding shareholder distributions. They have reiterated that banks should exercise extreme moderation on variable remuneration (bonus payments) and have set limits for dividend payments to equity holders and prudence on any share buy-back schemes.
We See Value in Lagging Corporate Hybrid Spreads
As we are nearing the end of 2020 and assessing pockets of potential value going into 2021, we have to question the strong rally we have just experienced and assess the attractiveness of the hybrid spread multiple and whether or not we can expect further compression.
How Has COVID-19 Changed ESG?
ESG investing was tipped to be the biggest theme of 2020 for financial markets, but was swiftly superseded by the COVID-19 pandemic, which has dominated investors’ thoughts since Q1. We thought it was important to revisit this topic and explore if and how the pandemic has changed the world of ESG.
Default Outlook Points to Further HY Tightening
We have now retraced some 90% of the March widening in European high yield (on a spread basis and relative to the January tights), a recovery trend we expect to continue as economies open up and demand bounces back.
The Rodney Blog 2021: New Cycle, Similar Playbook
Speed of market movement will be a feature of this recovery as the market realises many of the same trends are firmly in place, and with the incredible technical backdrop this means lower yields as the cycle progresses.
More Upside for Bank Capital
2020 has not been an ideal year for those investors with a nervous disposition, as we have endured an unprecedented level of uncertainty soothed by an equally unprecedented level of monetary and fiscal stimulus
Second Series of Mortgage Holidays No Threat to RMBS
So while we certainly expect unemployment to increase across Europe, and we expect more borrowers will fail to pay their mortgages, we believe current mortgage performance is very far away from a level that would threaten coupon and principal payments in the major European RMBS markets.
Where Next for Treasuries and Rates
The gradual backup in yields since the onset of the pandemic has given Treasuries a little more potency to protect bond portfolios, though we don’t see the rise being anywhere near big enough for them to behave like they used to.
Time to Get Tactical in Treasuries?
Regular readers will know that we have a positive medium term view of spread products. This is based on a number of factors; valuations in our view are reasonably attractive compared to history, we are convinced that both monetary and fiscal stimulus will remain in place for an extended period of time, and perhaps most importantly we remain at a very early stage of the new cycle.