All insights

While there has been a rally in risk-off assets since January over coronavirus fears, credit markets have been largely resilient given strong technical demand, driven by huge inflows for bond funds and the wall of cash sitting on the sidelines.

Given where asset prices are at the moment, we would categorise inflation as a low probability, but high impact, risk.

Next month’s budget now has the green light to be Johnson’s fiscal bazooka, with tax cuts, housing schemes and infrastructure projects already mooted.

After a year of over 100 rate cuts around the world in 2019, we felt that 2020 would see major central banks engage wait-and-see mode.

This deal may well perform in the short-term, and we sincerely hope Alpha’s plan works, but we also recognise there is a high degree of execution risk and the domestic economy still has considerable headwinds.

Perfect timing is practically impossible in situations like these, but one way to tackle this risk is to gradually reduce ‘good’ duration by moving to the shorter part of the UST curve, which would be less sensitive to a move higher in yields.

Chris Bowie outlines the highlights and lowlights for the fund, the successes and challenges, the triumphs and the odd sleepless night.

In what was Mark Carney’s last meeting as governor of the Bank, the MPC delivered a mixed message.

Given the material positive performance seen in other parts of the fixed income markets in 2019, the CLO relative value proposition now looks even more attractive.

A rate cut now makes very little sense to us, and wastes one of the few bullets the BoE has left in its armoury. If they do decide to cut next week, we think it will be reversed within 12 months.

Ben Hayward looks at the Q4 performance for Asset Backed Securities and provides an outlook for the year ahead.

Chris Bowie looks at the performance of the Outcome Driven strategy over the last quarter and provides his outlook for 2020.