Banks

Primary market and trading activity may be declining as is typical in late December, but macro data doesn’t sleep, and central banks haven’t got the memo on the wind-down into year-end either with policy meetings at the Federal Reserve (Fed) and the Bank of England (BoE) scheduled for Wednesday and Thursday respectively.

With a macro backdrop of falling rates and solid global growth, TwentyFour Asset Management's Eoin Walsh says fixed income investors can expect healthy total returns in 2025.

An otherwise fairly uneventful year for the UK banking sector has occasionally been dented by headlines concerning the Financial Conduct Authority’s (FCA) investigation into motor finance commission arrangements.

With fresh uncertainty surrounding the path for interest rate cuts, we believe the high current income and typically lower volatility offered by European asset-backed securities (ABS) and Collateralised Loan Obligations (CLOs) make them an attractive allocation option for this stage of the cycle.

It is important to understand the historical context behind “global” capital rules, and why they differ for EU and US banks.

With Donald Trump’s solid victory helping the dust around the US election result settle faster than many might have expected, investors’ attention has promptly shifted to the potential economic and financial market implications of the new administration.

In what has been a busy week for macro news in Europe, the latest round of data for the Eurozone delivered a surprise that could have implications for the European Central Bank’s (ECB) interest rate plans.

Over the last few months in the Additional Tier 1 (AT1) market we have seen a growing trend of issuers “pre-funding” their transactions even earlier. In some cases, such as Belgium’s KBC and Austria’s Erste Bank, bonds with expected call dates in 2025 have been tendered and replaced with new issues over a year early.

After years of decline in China’s property market and limited, uncoordinated, and ultimately unsuccessful attempts by the country’s authorities to provide some sort of solution, details have emerged over the last few weeks of a more coherent plan to stop the bleeding.

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.

Data out of Europe over the past few weeks has pointed to both lower growth and lower inflation, and rate expectations have shifted accordingly with market pricing now implying a 96% chance of another 25bp cut from the European Central Bank (ECB) on October 17, up from around 25% on September 20.

The building trend of consolidation in the European banking sector is important for several reasons, and could create further opportunities for bondholders.