Fixed income

So far, most fixed income asset classes have experienced a tumultuous 2022. With high yield markets bucking the trend in recent weeks, George Curtis takes a closer look at the drivers of the sector’s recent strength and its current opportunity set.

Despite the ECB's recent review bringing some previously debated points surrounding AT1s to the forefront, we believe any changes would create undesired, real-world consequences if implemented.

Given the twin pressures of inflation and volatility, we believe the inherent strengths of short term bonds can give investors some comfort through this uncertain phase of the cycle.

We think a base case that central banks will follow a more measured monetary policy path than markets are currently pricing in is reasonable given the current backdrop.

Global bond markets have moved sharply in the wake of Russia’s invasion of Ukraine as investors have tried to assess the impact of an unprecedented raft of financial and economic sanctions.

Default rate estimations depend on how you define defaults and what index you use, but there is no doubt we are at record lows in European high yield at the moment.