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Looking below the surface of fixed income markets: 360°, Q2 2021

What is our current view of fixed income markets? And where do we see the best relative value? In our latest edition of 360°, Andrew ‘Jacko’ Jackson, Head of Fixed Income, and our team of specialist investors consider the areas that have the potential to deliver superior risk-adjusted returns.

There remain many challenges ahead for credit markets

On the surface, fixed income markets has been pretty quiet but, below the surface, the currents have been violent.
Although many of us were focussed on the possibility of this, it has caught market participants off guard, particularly those for whom rates have been a permanent source of income: consistent, solid, one way and always positive.

Investment grade corporate credit spreads have barely moved over the quarter either in Europe or in the US. Yet, the asset class has had one of its most negative, and most volatile, quarters ever. The US Investment Grade Corporate Credit index lost 4.5% in the first quarter of 2021, making it the worst quarterly performance since the global financial crisis. High yield markets fared no better with a loss of 0.08% for global high yield. In this publication, we focus almost exclusively on what’s happening in credit land. 

Which way inflation?: issues in focus this quarter

In this issue of 360°, we also take a closer look at:

  • Relative value: the unresponsiveness of spreads
  • Structured credit: Structures have done what they were designed to do
  • Sustainable finance: the link between ESG scores and credit ratings

See below for a flavour of these sections or read the full report for a more comprehensive picture.

Fixed Income Quarterly Report

Q2 2021
 

Archive: previous editions of 360°

As fixed income markets have moved through the economic cycle, our thinking has also developed – take a look at some of our previous reports to see how the investment landscape has changed over the past year.

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