Banks have done their part – now will markets catch up
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.
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BoE stress test shows resilience of the UK RMBS market
Elena Rinaldi lays out analysis from the team's recreation of the BoE's bank stress test from a mortgage default and loss point of view, applying it to a benchmark UK RMBS BBB-rated bond. Ultimately finding that this type of analysis gives us confidence that the UK RMBS market can withstand stresses beyond those applied by the BoE.
ECB's bank lending survey has something for everyone
Felipe Villarroel gives an overview of what he believes to be important features of the survey, reflecting on both the good and the bad news.
PMIs below expectations in Europe and the UK
Felipe Villarroel looks at the preliminary numbers for July PMI Manufacturing and PMI Services data, and how from a markets point of view, he thinks volatility will remain in place while both rates and spreads should trade in a range as we await for more clarity on whether inflation will allow Central Banks to pause and the extent of the slowdown in H2, particularly considering August is looming.
Multi-Sector Bond Quarterly Update – July 2023
In our MSB update, a member of the Multi-Sector Bond team reflects on the banking turmoil that occurred in Q2, as well as happenings around the US debt ceiling and global inflation. She then goes on to discuss the ways the MSB team have responded to Q2 events.
Asset-Backed Securities Quarterly Update – July 2023
Douglas Charleston believes European ABS has once again provided a rare bright spot for fixed income. He explains how, from Q1 to Q2, focuses have shifted, and delves into different macro-economic variables affecting the ABS market.
Reinvestment risk growing, along with the soft landing narrative
What level of risk are investors willing to take? As central bank rates hike and a soft landing narrative makes its way into analysts’ forecasts, Eoin Walsh takes a look at what affects this has on investment risk and reinvestment risk.
Investment Grade Quarterly Update – July 2023
Jack Daley takes a look into the economic events that have influenced the investment grade markets in Q2. He then goes on to explain why he believes investment grade fixed income offers the most attractive risk-adjusted returns currently available.
Soft landing narrative taking hold
What sort of landing will the global economy experience? With the recent release of the US CPI report, inflation has been on a downward trend and the resilient activity data has continued to surprise many. This report has acted as a trigger of sorts for increasing calls for a soft landing.
Two interesting reports by the Bank of England
The Bank of England has released two reports, namely the Bank of England’s UK Banking Sector Stress Test and the Credit Conditions Survey. Felipe Villarroel discusses the findings in these reports.
Is the UK Labour Market easing at the margin?
Following the release of the Monthly Labour Market Overview, Felipe Villarroel highlights key takeaways on the tightness of the UK’s labour market. He assesses the changes to the demand and supply of the labour force - focusing on the ‘Inactivty Rate’, “Long-Term Sick” and “Retired” categories, and migration trends - and what this means for wage inflation.
A helpful technical
As mid-year investment bank reviews hit our screens, we are seeing a shared expectation of spread decompression between IG and HY bonds, signalling rising defaults. Pierre Beniguel argues that tightening HY spreads and resilient performance suggest surprising sector support due to lower issuance and available cash.