Strategic Income Quarterly Update – October 2021

While tariffs have done meaningful damage to the economic outlook and raised volatility in rates markets, the softening of the US stance has restored confidence in credit returns for 2025.

The latest Labour Market Overview published by the UK’s Office for National Statistics (ONS) on Tuesday morning has raised eyebrows, with some metrics seemingly having deteriorated quite rapidly versus last month.

The European high yield (HY) default rate spiked higher in May with the largest monthly default volume on record (€6bn).

As markets digest and speculate about the implications of the Trump administration’s 1,000+ page One Big Beautiful Bill Act (OBBBA), new details are beginning to emerge.

The European Central Bank (ECB) will be alone this week in delivering its latest monetary policy decision, with the next Federal Reserve, Bank of England and Bank of Japan meetings not until the week commencing June 16.

Over the last couple weeks, we have seen an ongoing increase in government bond yields across the major global economies, with a particular focus on Japan as yields on longer dated Japanese government bonds (JGBs) have moved sharply higher.