Obligations

The last few weeks have seen former President Donald Trump establish a lead over current President Joe Biden across polls in the run-up to November’s US election. Even though it is early days and a lot can change before November (including the Democrat candidate), it is worth considering what a second Trump term might mean for the world economy and for fixed income markets.

Last month saw the European Central Bank (ECB) get their cutting cycle underway with a 25bp cut in the deposit rate to 3.75%. However, any expectations for a rapid series of reductions after the first move were tempered by President Christine Lagarde, who at the subsequent press conference was clear that the ECB could move in phases in which they left interest rates unchanged.

Johnathan Owen, Portfolio Management, defines the second quarter of 2024 as another interesting period for financial markets, marked by the first rate cut from the European Central Bank (ECB) in June and President Macron's snap election announcement in France. He outlines what these meant for the Investment Grade (IG) team.

A member of our Multi-Sector Bond team takes us on a journey through market sentiment. He highlights its strength in Q1, the reversal in Q2, and the pivotal role of upcoming data as the main driver of risk sentiment moving forward.

Elena Rinaldi, Portfolio Management, wraps up the second quarter of 2024 for the Asset-Backed Securities (ABS) team. She notes that while financial markets experienced mixed performance and broader volatility, the ABS market remained relatively resilient and delivered strong performance.

There is little disagreement among investors and economists that the last few years have been highly unusual in many respects. An inflationary shock in developed markets, one of the fastest rate hiking cycles on record, the worst year in decades for government bonds (2022), and mild recessions with no movement in unemployment are just a few of the dynamics that have strayed from recent norms.

After weeks of volatility following President Emmanuel Macron’s decision to call snap parliamentary elections in France, markets were breathing a sigh of cautious relief on Monday after the far-right Rassemblement National (RN) underperformed the polls.

One of the drivers of the dovish pivot from the Federal Reserve (Fed) in December was the acknowledgement that the risks to the policy outlook had become more two-sided. In other words, while higher rates were still needed to tame inflation, the Fed saw a risk that staying restrictive for too long and risk damaging a labour market that has so far shown remarkable resilience.

La vigueur de l’économie américaine, qui défie les prévisions, a été l’un des principaux moteurs des marchés financiers ces derniers trimestres, mais comme les perspectives économiques divergent, nous estimons que la valeur relative des titres obligataires est meilleure en Europe aujourd’hui.

For any fixed income investors that follow the England football team, the plan for H2 2024 may feel somewhat familiar – no substitutions in the second half.

Ce dernier article de Fixed Income explore le potentiel des marchés émergents (EM) dans l’environnement économique actuel, malgré les importantes sorties et les risques perçus. Malgré les sorties et les risques perçus, les EM offrent des opportunités attrayantes aux investisseurs obligataires.

With French snap elections and a lean to the right, June’s EU election continues to pique investor attention. We ask Chief Economist Reto Cueni and Head of Global and Swiss Bonds, Anna Holzgang, to explain the stories behind the headlines grabbing investor attention.