Sharing our convictions

EM GDP growth remains higher than the rest of the world, EM central banks have been more proactive than developed markets in managing inflationary pressures, and the US dollar’s precipitous rise this year has had a greater impact on developed country currencies vs. emerging markets.

In the Global High Yield Outlook, portfolio manager Stella Ma, Senior Credit Analyst Jim Stahl and credit Analyst Rrezart Rexhepi make the case for why they believe the fourth quarter is the time to begin gradually scaling into high-yield bonds.

Geopolitical tensions, an energy crisis and inflation have marked global activity in 2022. The ball is now in the court of central banks, which in the months ahead will have to quell runaway inflation without risking a global economic freeze.

In their latest Tribune, Head of Macro Strategy Platform Yann Lepape and his team reveal how they are positioning their portfolios on the back of the UK’s mini-budget crisis, the drop in US house prices and EM debt outflows.

With developed market central banks determined to hike rates to control inflation, many economists think a global recession may be around the corner. But some emerging markets are further ahead in the current economic cycle, while a pickup in China’s growth could cushion the blow from recessions elsewhere.

Our models are signaling that not only the economy but also the risk environment is deteriorating further. Possible further interest rate hikes are weighing on both equity and bond markets, with no relief in sight at present.

In this Autumn Credit Outlook, the Corporate Credit team provide their insights on the upcoming months for corporate bonds with a focus on solid investment-grade companies.

With central banks speeding though their hiking cycles, a return to rates stability could allow investors to reap the rewards of bond yields that are unusually high for this point in the cycle.

Asset owners are increasingly demanding net zero plans from their investment managers, who need to determine how to track and reduce portfolio emissions. Issues include: rebalancing vs rate of reduction, whether it’s too early for Scope 3, and ensuring engagements go beyond the more receptive European and US markets.

The first round of Brazil’s general elections will take place on Sunday, October 2nd, with former president Luiz Inácio Lula da Silva and the current president Jair Bolsonaro facing each other. Thierry Larose, Portfolio Manager at Vontobel, discusses how markets are viewing the two candidates.

The Corporate Credit team reveals how they plan to navigate the fourth quarter of 2022

Are central banks overreacting? Jobs data may offer a hint. The accelerated Fed tightening has shown a mix of immediate and lagging effects. There are also emerging markets opportunities for investors willing to look through the short-term noise – the view from Head of Macro Strategy Platform Yann Lepape and his team.