Monetary Policy

Gary Kirk and Eoin Walsh hosted a breakout session on the MSB stage where they provided an update on portfolio performance and their outlook for fixed income markets.

Partner and Portfolio Manager Eoin Walsh discusses Q2 performance for the Strategic Income strategy and provides his outlook for 2020.

Partner and Portfolio Manager Felipe Villarroel provides an update on fixed income markets.

There have been two topics concerning the yield curve in the press over the last few days, which we think merit closer attention. As regular readers will know, the US yield curve in particular is closely followed by market participants and can dictate a lot of what happens in fixed income markets globally.

A lot has been made of the recent recovery in equity markets, especially in the US, given the obvious underlying weaknesses in the economy. It is quite clear to us the economic fundamentals do not justify such high valuations in risk assets, but despite being a serious consideration in our assessment, there is often much more to valuations than just fundamentals.

CEO Mark Holman provides his outlook for credit markets in 2020, highlighting investment themes and sectors that still offer fixed income investors good relative value.

Partner and Portfolio Manager Felipe Villarroel provides an update on fixed income markets.

The coronavirus pandemic has brought about perhaps the greatest– and fastest – repricing of risk fixed income investors have ever witnessed.

The list of policy actions from the major central banks keeps getting longer, and today the Bank of Japan has added the purchase of “as many Japanese government bonds (JGBs) as necessary” so as to keep the 10-year rate at around zero percent.

When the Fed announced last month that it would be buying investment grade corporate bonds, it was said to have thrown the kitchen sink at the coronavirus problem. After this latest move, there are holes where the kitchen cabinets used to be.

It has been a positive sign for us that despite lockdowns being enforced in most of the major economies around the world, in the last two weeks several issuers have managed to successfully raise new debt via the primary market.

After a period of material weakness in spreads and general market stress, the common ingredient to recent corporate bond spread stability and subsequent strength has been the resurgence of the primary market.