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Fixed Income

Peak UK Interest Rates Are Finally On The Horizon

Time is running out on the Bank of England’s tightening cycle. UK economic growth is flirting with recession, unemployment is rising, house prices are contracting and inflation is decelerating. Markets are overestimating the eventual bottom in UK inflation, and thus are also underestimating how much the Bank of England will eventually cut rates in the next easing cycle, which could begin as soon as H1/2024. The backdrop is turning increasingly positive for Gilts on a medium-term basis, while the overbought pound is due for a breather.

Global Fixed Income Strategy, Foreign Exchange Strategy by Chester Ntonifor
Eurozone Sentix: Green Shoots?
The Sentix Economic Index for the Eurozone sent a positive signal on Monday. It unexpectedly increased from -22.5 to -18.9 in August, surprising expectations of a further deterioration to -24.5. This marks the index’s first increase in four months. A…
Daily Insights
US Credit Spreads Are Expensive
BCA Research’s US Bond Strategy service cautions against turning bullish on corporate bonds. Corporate bonds have delivered strong excess returns versus duration-matched Treasuries during the past two months. Yet the team’s fair value models, based on…
Daily Insights
Be Wary Of Credit Risk

Our Portfolio Allocation Summary for August 2023.

US Bond Strategy by Ryan Swift
Taking Stock

August offers an opportunity to review our key views. European growth is turning the corner and inflation is improving, but does it guarantee an imminent breakout in European stocks?

European Investment Strategy by Mathieu Savary
US Labor Market: Resilient But Cooling
Nonfarm payroll employment increased by less than anticipated in July, rising by 187 thousand versus expectations of 200 thousand. In addition, the June increase was revised down from 209 thousand to 185 thousand. Similarly, average weekly hours worked…
Daily Insights
Don't Chase Yields Higher

Some thoughts on this week’s bear-steepening of the Treasury curve and this morning’s employment report.

US Bond Strategy by Ryan Swift
The Collapsed Complexity Of Stocks Versus Bonds Spells Danger For Goldilocks
The recent ‘Goldilocks’ stock market rally is predicated on the hope that developed countries really can kill inflation without killing their economies. But one important warning sign suggests that the rally has gone too far too fast, and is vulnerable to…
Daily Insights
A Mixed Message From Caterpillar
Caterpillar’s Q2 earnings results released on Tuesday beat consensus estimates by a wide margin. Second quarter profit of $2.92 billion ($5.67 per share) came in well above expectations of $2.38 billion ($4.46 per share). The stock jumped to an all time high…
Daily Insights
Fitch US Downgrade: AA+ Is The New AAA
US financial markets were dealt a summer shock yesterday with Fitch Ratings lowering its sovereign credit rating on the US to AA+ from AAA. This brings the rating down to the same level as that of S&P, which announced its own US downgrade nearly twelve…
Daily Insights

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