Fixed Income

European yields have returned to more historical norms following the years in the low-yield wilderness, while the German fiscal situation is reaching an inflection point.

April unfolded as a month of intense turbulence in financial markets, driven by a barrage of political manoeuvrings, economic uncertainty, and shifting monetary policies. Markets were rattled by elevated tariffs, escalating rhetoric, and retaliatory measures that prompted investors to reassess growth prospects, price in heightened recession risks, and retreat from riskier assets.

According to the Institute for Economics & Peace, there are 56 active conflicts in the world, the greatest number since the end of World War II. Increasingly complex geopolitics and ReArm Europe are keeping investors on our toes, analytically.

Navigating fixed income markets can be a daunting task for those unfamiliar with their intricacies. A multitude of factors – fundamentals, valuations and technicals – can impact a wide range of instruments – sovereigns (developed & emerging), corporates (investment grade and high yield) –, contributing to a highly complex financial landscape.

Following the US election, what will the bond landscape look like around the world in the near term and the medium term? President-elect Trump should be able to implement much of his political agenda over the next few years. We think four themes stand out: Tariffs, Regulations, Tax Cuts, and Immigration. What we don’t yet know is the timing and the magnitude of these elements.

Over the last 2 years Central Banks-driven rates hikes have deeply impacted the High Yield markets globally.

Ready for change?

On April 13, Iran decided to strike Israel with 300 drones and missiles following an attack on its diplomatic compound in Syria. Regional escalation and oil price are at risk. This tail risk cannot be ignored. We are closely monitoring the unfolding situation.

With 2024 underway, many bond investors are still wondering how the environment for Emerging Markets debt will differ from that of 2023.. Indeed, it looks more benign for Emerging Market Debt ….

The major advantage of a convertible bond is its ability to gain exposure to the equity markets while benefiting from downside protection.

In recent years, new structural trends have emerged, such as the polarization of the world, the re-localisation of supply chains, and the fight against climate change. These new trends are leading to higher inflation and lower growth. This new paradigm is having a significant impact on the financial situation of companies, and therefore on investment in corporate bonds. This calls for strategic adaptation on the part of investors. Adopting a strategy that aims to deliver a performance independent of credit market trends would therefore appear to be an investment solution worth considering in this new environment.

After 2022, which covered the end of a decade of monetary policy loosening, 2023 has been the year of the repricing of the whole interest rate curve. The end of Central Banks’ "higher for longer" mantra supported a steepening of the yield curves and repriced real interest rates which are back now in positive territory, for the first time in close to ten years.

“Compound interest is the eighth wonder of the world”, said Albert Einstein.

“Compound interest is the eighth wonder of the world”, said Albert Einstein.

Remember money market strategies? They’re back!  Once the latest rate hike is incorporated, money market strategies can offer yields above 4%!  A record path and close to a record return in money market strategies since 2001.  Money market strategies have regained their popularity as central banks have hiked rates in their fight against inflation.  

Will the central banks of developed countries succeed in their bid to bring inflation back to their 2% target by the end of 2024... without triggering a recession? Can China still avoid deflation? After a few months of calm, aren't rising oil and agricultural prices likely to further complicate the task of central banks?

It's back-to-school time, and time for investment decisions... Will the US fall into recession?

If you were intrigued by our June comment on the return of the money markets (Money markets...

As we reach the halfway point of the year, it seems that recession may be avoided on both sides of the Atlantic, but growth forecasts remain weak...

Money market strategies are coming back. The multi-decade bonanza on the back of lower yields and accommodative central bank policies ended abruptly last year.

With the upcoming 2023 Turkish presidential election, scheduled to take place on 14 May, we are sharing our views and sentiments on the possible outcomes and their consequences.

Bond investors did have a rough time in 2022. But a new era begun when central banks initiated their forced march of interest rates hikes, bringing some fresh opportunities to investors.

Portfolios managed by Candriam have no exposure to any Credit Suisse security, OTC exposure or stock-lending exposure.

After 2022, an “annus horribilis” for many investors, we believe that bond repricing now offers many opportunities.

“Nowhere has it been considered a disastrous indirect tax is created by constantly rising inflation, nor what the results are.” (Welche vernichtende indirekte Steuer zudem in der fortschreitenden Papiergeldinflation liegt, wird übrigens an keiner Stelle berücksichtigt – Rudolf Havenstein, 1922