Fixed Income

TwentyFour Partner and Portfolio Manager, Douglas Charleston, explains how ABS markets have performed in Q4 2021 and provides his outlook for the new year.

Given the swiftness of the Fed’s pivot we think risks are tilted towards the central bank doing more and not less. We wouldn’t even rule out a 50bp rate hike at some point.

As bondholders, we are comforted by all the banks passing such a severe test.

Against a backdrop of 4.20% year-on-year UK consumer price inflation (CPI), if you got your timing right, linkers (inflation-linked UK government bonds) will certainly have outperformed conventional Gilts by some margin.

The labour market in the US shows little sign of weakening, despite the huge number of jobs already created this year.

Markets have clearly experienced some periods of volatility this year, and while European CLOs haven’t been immune to this, both fundamentals and prices have been remarkably stable.

Emerging markets assets have endured a lot of punishment during 2021.

Shortly after publishing his annual Rodney Blog, TwentyFour CEO Mark Holman sat down with Tom Porter to discuss the biggest calls fixed income investors will have to make in 2022, and explain why he believes the current disconnect between monetary policy, the economy and the markets cannot last for long.

With floating rate assets likely to be high on investors’ shopping lists for 2022, Doug Charleston looks at the floating rate options across fixed income and highlights the highest yielding opportunities.

Fundamentally the outlook for 2022 appears less supportive than it was 12 months ago.

What we are currently experiencing is a disconnect between monetary policy, the economy and the markets, a disconnect that in our view will struggle to survive much longer.

Marko Feiertag take a closer look at Santander’s latest consumer ABS transaction, which attracted strong demand despite being increased to a bumper €1.5bn in size.