Fixed Income

Many end-investors might assume that it is equities managers that are most at risk from whipsawing jerks in market sentiment, but fixed-income managers, too, can find themselves out of position very quickly, as something they did not see coming… comes.

The bond market has never had great investment appeal for Australia’s self-managed superannuation funds, but with rising yields improving their proposition, some observers say the investment tide may be coming in for fixed interest.

Credit and equity markets both suffered a very bad 2022, as the collapse of negative correlation between stock and bond prices left no safe haven for investors. But 2023 could be a big year for bonds, with analysts warning investors waiting on the sidelines that they risk missing out.

Investors are flocking to risk stocks in the hope of an early Fed pivot following a better-than-expected US inflation report. While it is too early for a pivot, according to Atchison Consultants, the longer-term outlook for fixed income is positive.

As inflation rises, senior secured loans offer a relatively undiscovered respite.

Inflation may be peaking but no recession in sight says Joseph Kalish.

The events of 2022 have brought the fixed income and defensive allocations of multi-asset portfolios back into the spotlight.

The ‘unorthodox’ policy of quantitative easing has been central to the excesses in markets, says JP Morgan’s Liang.

As one can expect, there was a lot of volatility in US Treasuries during this period, making it a challenging time for analysts.

History has shown that investing into bank loans and credit markets at or near current valuation levels has delivered high single digit and double digit returns over the long-term.

The Australian dollar could fall to US65 cents by the year’s end as higher interest rates in the US and capital inflows push the US dollar higher.

In a challenging environment plagued with uncertainty and volatility, rising inflation has turned investors away from risky growth assets.