TwentyFour

European governments are unveiling hefty support packages to ease the pain of Russia’s gas shutdown, with implications for inflation and the chance of recession, says Dillon Lancaster.

While economic uncertainty in Europe is building, the healthy cash balances and low refinancing needs of Europe’s high yield bond issuers make a spike in defaults unlikely, says George Curtis.

Dillon Lancaster evaluates the impact of Powell’s Jackson Hole speech on inflation and why he believes next month is set to be a very important period for central bank meetings.

With Europe facing an energy crisis and the UK bracing for a five-quarter recession, a strong allocation bias to the US seems a no-brainer. However, George Curtis says that when looking at relative value in fixed income, the decision is never that simple.

Investors are eyeing a peak in inflation once more after US data came in lower than expected for the first time this year, and with credit finally seeing positive flows again, George Curtis sees markets grinding tighter over the rest of the summer.

Fixed rate bond yields may have climbed as markets priced in higher interest rates, but both existing and new investors in floating rate bonds have more to gain as central banks keep hiking, says Pauline Quirin

With the Bank of England doling out a double dose of doom on UK inflation and growth on Thursday, Eoin Walsh says it is refreshing for investors to get such a candid assessment from a central bank.

With bank Additional Tier 1 (AT1) bonds broadly trading at a 10% discount to par and many being priced to perpetuity, Dillon Lancaster suggests investors are either missing or ignoring the solid fundamentals on show in Q2 earnings.

Pierre Beniguel explains why high yield issuers are selling new bonds at steep discounts to par value, and why this represents an opportunity to build potentially significant performance into fixed income portfolios going forward.

European ABS issuers largely held off on printing new deals in Q2 as broader market volatility saw spreads widen, but we are already seeing more investor-friendly structures and many favoured names are likely to bring deals offering markedly higher yields when activity picks up again.

With earnings season entering full swing, David Norris highlights some indicators to look out for when assessing the current state of the US economy and the resulting actions expected from the Fed.

Douglas Charleston looks at the development of the European ABS market in the second quarter of 2022 and explains what this could mean for investors going forward.