Fixed income

George Curtis discusses how credit markets have performed in Q1 2021 and provides his outlook for the year ahead.

What is most interesting about the CS situation though is that to us it illustrates the ability of large banks to bolster capital when such events occur, and the range of options they have to do it.

TwentyFour Asset Management CEO, Mark Holman, explains why the likes of Warren Buffett and Ray Dalio are warning investors away from fixed income, and points out where he thinks they’re wrong.

TwentyFour Asset Management CEO, Mark Holman, explains why he believes investors should still be starting their search for income in bonds, and how they can look to combat further rates weakness by looking globally and targeting the right areas in credit.

ESG conscious investors, ourselves included, of course, are applauding this brave decision by Barclays to put their conscience before profit, but they are not the first to do so.

TwentyFour partner and portfolio manager Gordon Shannon looks at the developments we saw in investment grade credit in the first quarter of 2021 and provides his outlook for the rest of the year.

TwentyFour AM partner and portfolio manager Douglas Charleston discusses how ABS markets have performed in the first quarter of 2021 and provides his outlook for the rest of the year.

This recent stability in the rates curve suggests to us that for now the market is listening to the Fed’s rhetoric and as a result the UST market feels better balanced.

With treasury yields moving aggressively higher this year, anyone reading or listening to the financial press will have become very accustomed to headlines highlighting the negative performance of “Bonds”.

TwentyFour Asset Management partner and portfolio manager, Chris Bowie, looks at the specific challenges faced by investors wanting to invest sustainably in the bond markets and considers two controversial examples in Tesla and Coca-Cola.

There are many other aspects of SFDR to discuss and we expect the market to take some time to fully adjust.

Primary deals launched in the European high yield market over the last two weeks have been diverse, and at times opportunistic.

In terms of execution, it is difficult to assess any ‘ESG premium’ in Brass 10 given the overall strong demand, and in our view it’s still early to weigh the importance of a ‘social’ label for ABS investors.

The Fed maintained its dovish stance on Wednesday and offered very little in the way of resistance to the ongoing rise in US Treasury yields.

For most investors this deal would likely be considered a liquidity position, and at a spread of 15bp this is certainly not the sexiest proposition the European ABS market has to offer, but what is interesting about this latest instalment from the STORM platform is what makes the deal ‘Green’.

The bear steepening of the US Treasury curve has undoubtedly been the story of 2021 so far for fixed income investors, many of whom will have felt the adverse impact of the broad rates sell-off on their portfolios.

For fixed income investors, we think floating rate European ABS bonds could be an allocation consideration to help improve return prospects and reduce volatility.

In a developed country such as the US, a scenario of rising inflation expectations is usually accompanied by a bear steepening across maturities of the underlying yield curve.

Our year-end forecast of 1.50% for the 10-year is already looking very out of date, and it would be a brave person right now to suggest that 2% won’t be touched any time this year as the recovery gets into full flow with the Fed holding its tongue.

Last week UK Asset Resolution (UKAR) announced the sale of its final mortgage loan portfolios, bringing to a close a decade long chapter of state ownership.

In summary things are going quite well, and in this scenario a rise in government bond yields does not necessarily bring about a tightening of financial conditions.

A couple of weeks ago we wrote about Treasuries breaking new ground and the potential for them to go higher as higher inflation expectations gathered pace.

The Bank of England have just added to the debate about how much of the recent surge in savings will be deployed in the form of consumption as we return to ‘normality’.

Our end of year view on the 10 year is 1.50, but we could get there a lot quicker - now is not the time to be brave on Treasuries.