All Fixed Income articles – Page 95
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White papersCore Matters Investment Returns: A 5-year perspective
2019 has seen huge inflows into Fixed Income (FI) funds and outflows from Equities. From a medium-term return perspective this makes no sense. The formidable demand for safe assets reflects cyclical and structural forces (e.g. ageing). No matter the economic scenario, FI returns over the next five years are ...
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White papersTrump Impeachment Is Likely, But Impact On Financial Markets Would Be Short-Lived
Impeachment process: The Democratic Party has announced the opening of an impeachment inquiry against President Donald Trump following revelations that he pushed Ukrainian President Volodymyr Zelenskiy to investigate the son of Democratic opponent Joe Biden. The impeachment process is long and articulated. An 80% probability that Trump will be impeached, followed by acquittal in the Senate, which would keep him in office for the remainder of his term, is our base case scenario.
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White papersHigh Yield: Rates, Recessions and Relative Value
While there is no shortage of risks to consider in today’s high yield markets—from ESG to the end of the credit cycle—Barings’ Martin Horne describes how taking a contrarian approach can help investors uncover pockets of value
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White papersABS analysis: through the ESG lens
The drive to push environmental, social and governance (ESG) investing into the mainstream has dominated the asset-management industry in recent years. While the discussion on ESG in many asset classes is well progressed, to date there has been less focus on ESG in asset-backed securities (ABS). Beyond looking at the explicit environmental elements of green ABS, there has been little emphasis on assessing the social and governance factors within securitisation.
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White papersInvesting in an era of heightened risk velocity
For investors navigating current market conditions—an environment where a single tweet can change the market direction and momentum—it is not just the risks themselves that are challenging but also the elevated pace at which risks can move from peripheral threats to portfolio impacts. We call this “risk velocity.” This paper explores the primary drivers for this phenomenon and potential asset allocation implications.
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White papersThe ECB And The EU Banking Sector: Some Relief, With Winners And Losers
The new two-tier deposit-reserving scheme: With this measure the European banking sector could save up to c. €4 billion in annual interest costs (based on avoiding the -50bps deposit rate). However, while a large number in absolute terms, this only accounts for c. 2% of earnings on average for the main banks in the sector and therefore has little impact on overall Returns on Equity and profitability metrics.
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White papersFlexible credit: all-weather allocation
Flexibility means having the freedom to invest strategically across fixed-income markets. In the second instalment of our five-part series, we look at how flexible strategies generate returns by allocating capital and risk across the credit spectrum.
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White papers
Are High Yield Investors Being Compensated for Risks?
In the context of today’s fundamental backdrop and default outlook, spread levels suggest investors are being fairly compensated, relative to other points in the cycle, for the amount of risk they are taking.
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White papersThe Fed Cuts Rate, But The Market Expects More
The Fed cut rates, but the market expects more: As expected the Federal Reserve lowered its target range for the Federal Funds rate by 25 basis, and now the market anticipates as many as three more cuts by the end of 2020. We think that is too much. In our view, the Fed is likely to pause to monitor the effects of the rate cuts on the economy, before acting again.
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White papersYour Questions Answered by Hermes Multi Strategy Credit
Your Questions Answered: a quarterly Q&A series featuring the top 10 questions that clients and prospective clients ask our investment teams.
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White papersQ4 Economic Outlook: Learning To Live With Deflation...
In his latest Economic outlook, Neil Williams, Senior Economic Adviser to Hermes Investment Management, argues that Japan-style deflation is becoming an increasing possibility elsewhere. While it may not involve a general downturn in living standards – Japan after all remains a prosperous G3, $5trn economy (almost twice the UK’s) – the main challenge would be the shift in mind-set needed to live with it.
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White papersFlexible credit: strategies for all seasons
A flexible, all-weather approach to credit investing has risen in popularity during the past decade. In the first instalment of a five-part series, we look at how flexibility has helped credit investors capture income in a low-yield world and manage duration risk. In an uncertain and often volatile environment, we consider what a flexible approach can offer investors at this stage of the macroeconomic cycle, and throughout the next.
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White papersLeaders’ Perspectives: Quarterly – Autumn 2019
In the Autumn 2019 issue of the Leader’s Perspectives:
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White papersIlliquidity: understanding the premium in fixed-income markets
Years of low interest rates have prompted fixed-income investors to look beyond traditional sources of yield and consider whether illiquid assets can boost returns. But while this illiquidity premium is widely discussed and increasingly sought, it has been inadequately measured and investors lack an understanding of how it operates in different conditions.
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White papersNuveen knows income - Securitized bonds: investment potential in a complex market
We think securitized credit may offer attractive risk-adjusted returns, but this complex market requires experienced, in‑depth analysis
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White papersDistressed Debt: Seeking Opportunity in Choppy Waters
Investors are increasingly looking to distressed debt as the credit cycle matures. But with a competitive landscape and significant growth in private credit and European high yield, this cycle could look different than those of the past. Stuart Mathieson, Head of Barings’ Global Special Situations group, and Bryan High, Co-Portfolio Manager of the strategy, discuss how the macro environment is impacting their outlook, and where they’re seeing opportunities today.
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White papers
Fed And Ecb, Bridging From A “Mid-Cycle Adjustment” To An “Impactful And Significant” Package.
The minutes from the latest ECB meeting suggest that the ECB is likely to proceed with a full set of measures in September, confirming not only the indications from President Draghi following the meeting but also the very latest statements by Olly Rehn, calling for the need for an “impactful and significant” package.
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White papersAsset Class Return Forecasts - Q3 - 2019
We expect economic growth to evolve around potential for most developed economies in 2020. It could subsequently decrease below potential in 2021 driven by a deteriorating cyclical environment and still anaemic global trade. Nevertheless, growth should stay in positive territory.
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White papersEmerging Markets Charts & Views - Q3 2019
The recent dovishness from the Fed, a benign inflation environment and the easing in global financial conditions continue to support a goldilocks environment for Emerging Markets (EM) assets. On the risks side, trade disputes appear to be softening as we approach the US presidential campaign. But the existing tariffs are weighing on the corporate earnings, with mixed prospects across regions as some countries are also benefitting from a restructuring of the global supply chain.
