Fixed Income

After the hit to risky assets and even US Treasury bonds in the wake of the so-called “Liberation Day” announcement of a far higher tariff regime, some semblance of calm returned to markets.

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.

The bond markets in March were already abuzz with talk of tariffs, as the Trump administration implemented previously delayed tariffs on Canada, Mexico and China. .

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.

Over the past weeks, bond markets faced significant volatility primarily due to a barrage of announcements from the White House.

Over the month of January, rates markets ended up at much the same point where they stood at the beginning of the year, but masking significant intra-month volatility. Usually, an inauguration would not be expected to cause much turbulence, as policy proposals should be well-understood and priced in.

The last month of 2024 was a difficult one for the markets. Most major rates markets sold off, with the US 10-year rising by 40 basis points. At the same time, risk assets offered relatively little respite.

This US presidential cycle was historic in many ways, not least in terms of the starkly contrasting policy agendas proposed by the opposing candidates.

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 a decade ago negative rates started looming, creating an unprecedented environment. Well the Fixed Income space is definitely the opposite, a lush jungle dominated by the canopy, aka the AAA-AA ratings, covering an Investment Grade A to BBB ratings understory, down to the High Yield BB and lower ratings forest floor.

Central banks were out in full force in September, with the Federal Reserve implementing a meaningful 0.5% rate cut, while the ECB continued its easing cycle with a cut of 0.25%.

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

August was no by means all rest and relaxation for market participants.

Based on our long-standing views of the financial benefits of sustainability, we integrate some level of ESG (Environmental, Social, and Governance) factor analysis across all our investment processes, and particularly for our sustainable investment strategies.

June was marked by a significant uptick in political uncertainty both in the US and the EU. European parliamentary elections saw right-wing parties gain increased prominence, particularly in France where the strength of their victory led President Macron to call surprise legislative elections.

May was a rather mixed month for bond investors, depending on which side of the Atlantic they were invested in. While US rates rallied, with the 10Y coming down by 18 basis points, Euro rates rebounded, with the German 10Y rising by 8 basis points.

The European Central Bank (ECB) has undergone a significant transformation, evolving from a passive observer to a proactive guardian of financial stability in the eurozone. As the ECB normalises its monetary policy after a period of unconventional measures, a key challenge has emerged: managing excess liquidity. This paper explores the ECB's evolving role in addressing this challenge.

In an ever-evolving financial landscape dominated by data-driven decision-making and economic uncertainty, understanding the nuances of fixed income investing is paramount.

April very much saw investors across most asset classes on the edge of their seats, waiting for the fog to lift on the inflation and larger macroeconomic picture and on how the Fed would react.

Discover how Candriam, with its low-correlation alternative strategy, is navigating the credit markets in these paradigmshifting times. Nicolas Jullien and Thomas Joret provide you with the essential information you need to understand this strategy.

March was a clement month for investors, with most asset classes delivering a positive performance.

High yield markets are shrinking. Do you know that they have contracted by 25% over the past two years? The ICE BofA BB-B Global High Yield Index has lost $654 million in value. In the meanwhile, investor demand for credit and high yield has rebounded at the end of last year.

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.