Fixed Income

George Curtis from the Multi-Sector Bond (MSB) team at TwentyFour Asset Management reflects on the third quarter of 2024 and its impact on credit and equity markets. Despite some mid-quarter volatility, overall performance remained strong, with government bonds leading the way.

With cracks starting to show in the US economy, many are wondering whether tight corporate bond spreads leave investors vulnerable. But with corporate balance sheets holding firm and yields on higher quality bonds looking attractive, staying invested in credit should continue to reward investors.

Douglas Charleston (Partner, Portfolio Management) and Pauline Quirin (Portfolio Management), from our Asset-Backed securities team provided a comprehensive understanding of the key aspects and trends within the Significant Risk Transfer (SRT) market.

Johnathan Owen (Portfolio Management) from our investment grade team discussed social bonds in more detail and TwentyFour's approach to considering social factors in the companies that we invest in.

The quantity of cash parked in money market funds has been at the forefront of investors’ minds for some time now. The surge of inflows for these short term risk-free instruments as rates rose was no surprise considering they now yield more than a single-B rated high yield corporate was offering just a few years ago.

Recent economic news may have created a sense of uncertainty across Europe, but Ellie Aylen from our Asset-Backed Securities (ABS) team offers a more optimistic view. According to low-level data from the Bank of England (BoE) and the European Central Bank (ECB), the actual performance is much more reassuring than what the headlines might suggest.

Johnathan Owen, Portfolio Management, discusses our longstanding carbon emissions engagement policy and its focus on collaborating with companies we believe we can influence. Our goal has been to shape their environmental journey over the medium to long term, leading to a reduction in carbon emissions.

Pauline Quirin, Portfolio Management, provides an update on the global Collateralised Loan Obligation (CLO) market, highlighting why we think CLOs are positioned to deliver the strongest performance across fixed income markets for the rest of the year.

In his latest update on the European high yield market, Pierre Beniguel discusses two key topics: the Maturity Wall and Default Rates. He highlights that as interest rates continue to rise, default rates are projected to increase from 2.5% to around 3%.

Uncertainty is over, it was a 50 basis points (bps) move. As we mentioned in our previous blog, the most important take away from the Federal Open Market Committee (FOMC) meeting would be their assessment of the economy.

We have consistently highlighted the benefits of higher interest rates for the European banking sector. However, the current outlook suggests that lower rates are anticipated going forward.

While the majority of headlines have concerned whether the Fed will do 25bp or 50bp to kick off its cutting cycle, we think this is only one part of the discussion – and not necessarily the most important one.