Fixed Income

Investment Insights by our experts and thought leaders

Asian Fixed Income Monthly - January 2021

The US Treasury (UST) yield curve steepened in January. The prospect of increased federal spending in the US prompted a sharp upward move in UST yields at the start of the year.

Australian Fixed Income Monthly – January 2021

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) returned -0.42% over the month. The yield curve steepened as 3-year government bond yields ended the month flat at 0.11%, while 10-year government bond yields rose by 16 basis points (bps) to 1.13%. Short-term bank bill rates were unchanged.

Australian Fixed Income Monthly – December 2020

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) returned -0.27% over the month. The yield curve steepened as 3-year government bond yields ended the month flat at 0.11%, while 10-year government bond yields rose by 7 basis points (bps) to 0.97%. Short-term bank bill rates were largely unchanged.

Asian Fixed Income Monthly - December 2020

The US Treasury (UST) yield curve steepened slightly in December. The UST 10-year bond yield rose 7.5 basis points (bps) to 0.915%, while the 2-year bond yield fell by 2.7 bps to 0.122%. Concerns in the month revolved around rising COVID-19 cases in Europe, particularly in the UK, and over the uncertainty of fiscal stimulus in the US.

2021 Core Markets Fixed Income Outlook

As European Commission President Ursla von der Leyen announced the free trade agreement with the UK and the EU, she quoted T.S. Eliot: “What we call the beginning is often the end. And to make an end is to make a beginning. The end is where we start from.” Well, with the end of 2020 we certainly have a new year to look forward to, but it feels we are more like in the middle of this unsettled time than at an end.

2021 Emerging Markets Fixed Income Outlook

Despite the devastating human and economic toll caused by the COVID-19 pandemic across the globe, and in many emerging economies in particular, emerging market debt investors were rewarded with positive returns in 2020, with local currency, external sovereign and corporate bond indices posting returns in excess of 2.5%, 5% and 7%, respectively.

2021 New Zealand Fixed Income Outlook

We can head into 2021 with New Zealand the envy of many. But it remains to be seen how long this euphoria will last. Agriculture and horticulture are both promising, and the technology sector has been touted as the next big thing, but without a new major driver of growth, there’s no guarantee that our economic reality will match our ambition. Leveraging New Zealand’s exposure to fast growing economies such as China remains an important economic recovery strategy. But our greatest hope for emerging successfully from this period of wider “confidence slump” is that the low and plentiful cash stimulates risk taking and stimulates the economy, propelling New Zealand into its next phase of prosperity.

2021 Asian Fixed Income and FX Outlook

We expect North Asia to continue to lead the region’s recovery (at least in the first half of the year). But we also expect the growth divergence between North Asia and the rest of the region to narrow. Unprecedented fiscal support from governments have been pivotal to the ongoing recovery. We expect fiscal action to continue in the coming year but anticipate renewed private sector confidence as the vaccine becomes broadly available and provides a powerful tailwind to regional growth.

2021 Asia Credit Outlook

We expect Asian credit spreads will tighten gradually over the coming months, supported by a solid rebound in gross domestic product (GDP) growth for most Asian economies in 2021 and stable to slightly better corporate credit fundamentals.

Global Investment Committee Outlook: Especially buoyant non-US equities

Although some on the committee agreed with the market consensus for a moderate continuation of economic growth and equity markets, and a few were even more cautious, especially regarding increased fears of inflation later in 2021, the majority agreed with a more positive scenario in which the global economy outperforms market consensus, while equities, especially those outside of the US, rally sharply.

Asian Fixed Income Monthly - November 2020

The US Treasury (UST) yield curve flattened in November. Risk markets rallied after the US presidential election. Investor confidence was lifted following positive trial results of a COVID-19 vaccine. Yields subsequently retracted part of their earlier rise on news of soaring COVID-19 infection rates in the US and Europe and near-term downside risks to the economy.

Australian Fixed Income Monthly – November 2020

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) returned -0.11% over the month. The yield curve steepened as 3-year government bond yields ended the month 1 basis point (bp) lower at 0.11%, while 10-year government bond yields rose by 7 bps to 0.90%.

Developed markets fixed income quarterly (Q4 2020 outlook)

US Treasury (UST) yields rose in October. The US presidential election and the fiscal stimulus deal were the focal points of news headlines and markets in October. Worries about the acceleration of COVID-19 cases in the US and Western Europe, and renewed lockdowns in the latter, partially offset the upward pressure. Overall, 2-year yields ended 2.6 basis points (bps) higher at 0.155%, while 10-year yields rose 19.0 bps to 0.875%.

Asian Fixed Income Monthly - October 2020

US Treasury (UST) yields rose in October. The US presidential election and the fiscal stimulus deal were the focal points of news headlines and markets in October. Worries about the acceleration of COVID-19 cases in the US and Western Europe, and renewed lockdowns in the latter, partially offset the upward pressure. Overall, 2-year yields ended 2.6 basis points (bps) higher at 0.155%, while 10-year yields rose 19.0 bps to 0.875%.

Australian Fixed Income Monthly – October 2020

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) returned 0.28% over the month. The yield curve steepened as 3-year government bond yields ended the month 4 basis points (bps) lower at 0.12%, while 10-year government bond yields rose by 4 bps to 0.83%. Short-term bank bill rates were all lower.

US presidential election – Nikko AM’s views

In order to gain a range of perspectives on the US presidential election, Nikko Asset Management has gathered the views of the following experts and investment teams, representing many of our major asset classes and geographical regions.

Global credit quarterly

The strategy’s performance continued to recover during the last quarter. The strategy’s relative and absolute performances are now positive. Strong results in the banking sector, in particular the lower part of the capital structure (i.e. T2 and AT1 bonds) were a strong driver of the rebound.

Trump vs Biden: Can the best man win?

We suspect that many investors have become accustomed to a seemingly synchronized world with relatively little currency volatility – in a sense over recent years we seem almost to have been back in the 1960s, a period during which moves in exchange rates were quite rare and there was essentially a single synchronized global economic cycle.

Emerging market fixed income quarterly

The third quarter of 2020 corresponded to a continued recovery of all emerging markets (EM) debt segments, albeit at a slower pace compared to the second quarter. The market’s positive momentum faded in July and August and a mild consolidation phase even occurred in September.

Adapting to the “new normal”: Japan’s paradox

With the global outbreak of COVID-19 in the first half of 2020, the world was turned upside down. Under such circumstances, Japanese companies are now faced with new challenges to adapt to this “new normal”.