The FM Report

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Fixed Interest

The structural shift that wasn’t

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I have long been arguing that the Federal Reserve (Fed) will have to keep interest rates higher for longer, and markets seem to be coming around to the idea. I also remain convinced that when the Fed eases policy, interest rates will not come down as much as most people think, for two reasons: First, because the equilibrium real interest rate is higher than what the Fed and a … [Read more...] about The structural shift that wasn’t

Positive outlook for European bank bonds

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Accelerating inflation, the start of another Federal Reserve rate-hiking cycle and Russia’s invasion of Ukraine have triggered a rise in global bond yields and a widening of credit spreads. Although the economic outlook has deteriorated, European banks are entering the slowdown with healthy capital buffers and are in a position to benefit from the rising rates environment. … [Read more...] about Positive outlook for European bank bonds

Is there a bond opportunity hiding in plain sight?

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Bond markets have taken a hit over recent months, even lower risk areas. One of which now offers appealing value and a cushion against further set-backs. With the Federal Reserve (Fed) at the beginning of a hiking cycle, much commentary is focused on the potential for continued weakness in fixed income markets. As is often the case, markets try to anticipate the course of … [Read more...] about Is there a bond opportunity hiding in plain sight?

Potentially volatile European markets present opportunites

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Despite the severity of the pandemic across Europe, extraordinary levels of monetary stimulus have helped maintain relatively robust growth in the region over the last year or two. However, rising inflation has undoubtedly put pressure on policymakers, not just in Europe but around the globe, to rein in their supportive measures. The European Central Bank (ECB) has stated that … [Read more...] about Potentially volatile European markets present opportunites