Fixed Income

Investment Insights by our experts and thought leaders

Asian Rates and FX Outlook 2019

Global growth is expected to grind lower in 2019, with continued monetary policy normalization in developed markets being the key headwind for the world economy. Financial conditions will tighten further as the Fed continues its gradual increase in interest rates.

Asian Fixed Income Monthly Outlook - January 2019

In December, US Treasury (UST) yields fell as risk assets came under pressure from various factors, triggering ‘safe-haven’ buying.

Australian Fixed Income Outlook - January 2019

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 1.50% over the month, outperforming Australian equities which fell 0.12%.

Asian Fixed Income Monthly Outlook - December 2018

US Treasuries (USTs) registered gains in November, while yields fell along with faltering US equities.

Asia Credit Outlook 2019

The macroeconomic backdrop for Asian countries should remain broadly neutral for credit performance in 2019. GDP growth is expected to moderate across the key economies, although we don’t expect any hard landing scenarios to materialize.

Developed Markets Outlook 2019

Shakespeare once said, “present fears are less than horrible imaginings.” As we come to the close of 2018, we have observed equity markets turn double-digit returns to losses, an aggressive rise in interest rates and a modest increase on the perception of escalating tensions surrounding the world’s two largest economies.

Emerging Markets Outlook 2019

In addition, we have to consider the eventuality of a prolonged trade war. But China would be able to mitigate its impact initially via a combination of monetary and fiscal stimulus, helping offset the impact of tariffs to a certain extent.

Global Credit Outlook 2019

Credit markets didn’t perform in line with the expectations we set at the beginning of the year and disappointed most investors.

Global Investment Committee Outlook 2019: Tempered Positive View

So many developments have occurred since we last met in September, but the major ones were the surprising collapse in oil prices mostly due to geopolitical factors, the U.S.-China trade and BREXIT conflicts becoming increasingly intractable, and that aspects of the global economy showed occasional signs of moderation.

Global Fixed Income & Credit Outlook - November 2018

Global growth remains desynchronized, with China, the Eurozone and Japan continuing to show further signs of moderation, while the US remains relatively robust.

From the Australian Fixed Income Desk - November 18

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 0.24% over the month, outperforming Australian equities which fell over 2%.

Global Fixed Income & Credit Outlook - October 2018

Global growth remains desynchronized, with China, the Eurozone and Japan showing a further moderation in growth, while the US remains robust.

US Recession Risk and the Path for Interest Rates

The US economy is enjoying its second-longest growth cycle in history and is on the way to becoming the longest on record.

Asian Fixed Income Monthly Outlook - November 2018

US Treasury (UST) yields spiked at the start of October as the market responded to stronger US data and Federal Reserve (Fed) Chairman Jerome Powell's hawkish comments.

Asia's Current Account: Good or Bad?

On the back of unrelenting USD strength, 2018 has been a tumultuous period for Asian currencies. Countries in the region with current account deficits have been facing more currency pressure, prompting their central banks to engage in series of rate hikes to defend their currencies.

From the Australian Fixed Income Desk - October 18

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 0.48% over the month, outperforming Australian equities which tumbled over 6%.

Asian Fixed Income Monthly Outlook - October 2018

In September, the US Federal Reserve (Fed) raised interest rates by 25 basis points (bps). The monetary authority removed the clause that policy rates are "accommodative", and modestly raised its growth forecasts for this year and next.

From the Australian Fixed Income Desk - September 18

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was down 0.42% over the month.

Asian Fixed Income Monthly Outlook - September 2018

In August, the US Treasury (UST) curve flattened. Near-term yields rose due to expectations of a September Federal Reserve (Fed) rate hike, while mid to long-dated yields fell. Escalating US-China trade tensions and the weaker-than-expected July US jobs report pushed UST yields lower at the start of the month.

From the Australian Fixed Income Desks - August 18

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 0.81% over the month. The yield curve flattened as the spread between long-term and short-term bond yields narrowed.

Global Fixed Income & Credit Outlook - August 2018

Global growth remains desynchronized, with the Eurozone, Japan and the UK showing an ongoing moderation in growth, whilst the US remains robust.

Asian Fixed Income Monthly Outlook - August 2018

In July, US Treasury (UST) yields rose. US-China trade tensions continued to persist. The risk of a trade war between the US and Europe tempered after the two countries announced they will cut trade barriers.

Australian Fixed Income Monthly Outlook - August 2018

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 0.16% over the month. The yield curve flattened as the spread between long-term and short-term bond yields narrowed. 3-year government bond yields ended the month up 3 basis points (bps) while 10-year government bond yields also rose, up 2 bps to 2.65%.

Will Bloomberg's Index Become the First to Include Chinese Bonds?

In March 2018, Bloomberg announced a conditional decision to include Chinese bonds in its flagship bond index: Bloomberg Barclays Global Aggregate, starting from April 2019.

Asian Fixed Income Monthly Outlook - July 2018

In June, the US Treasury (UST) curve flattened. The US Federal Reserve (Fed)'s 25 basis points (bps) rate hike was accompanied by a more hawkish tone, supporting higher short-term rates.

Global Fixed Income & Credit Outlook - July 2018

Global growth is becoming increasingly less synchronized, with the Eurozone, Japan and UK showing an ongoing moderation in growth, whilst the US remains robust.

LatAm Elections: The Lure of the Left

Our London-based Emerging Market fixed income portfolio manager provides an update for Latin American markets in the midst of a hectic election schedule. Despite the risks, pro-market reforms should still progress to varying degrees across the region.

Asian Fixed Income Monthly Outlook - June 2018

In May, US Treasury (UST) yields ended lower. A solid US jobs report supported the bearish bias in UST yields that prevailed.

Happy Birthday ECB

The ECB recently celebrated its 20-year anniversary and instead of a birthday cake, DB research released a compelling chart about how different asset classes have performed over this time period.

House View: Global Economic Rebound And Equity Reflation

Despite uninspiring global equity performance in the last three months, at least for USD-based investors, Nikko AM’s Global Investment Committee continues to be positive on global equities on a one-year view, particularly those in Japan, Europe and the Asia Pacific, but remain unenthusiastic on global bonds.

Global Fixed Income & Credit Outlook - June 2018

Global growth is becoming increasingly less synchronized, with the Eurozone, Japan and UK showing some moderation in growth, whilst the US remains relatively robust.

Asian Fixed Income Monthly Outlook - May 2018

US Treasuries (USTs) experienced a sharp sell-off in April as yields rose about 10 to 24 basis points (bps) across the curve. Trade war fears between US and China receded, with Chinese President Xi Jinping's commitment to further open up the economy to foreign businesses.

Global Fixed Income & Credit Outlook - April 2018

The broad-based synchronized growth story continued to soften through March, as consumers pared back purchases in the face of rising prices.

Asian Fixed Income Monthly Outlook - April 2018

US Treasuries (USTs) traded in relatively tight range in March, with the yield curve bull flattening. The US Federal Reserve (Fed) raised interate rates by 25 basis points (bps), and signalled it could lift rates at a marginally more aggressive pace in coming years.

Global Ramifications of the Eurozone’s Huge Trade Surplus

Many economists and currency analysts, after years of ignoring such “old fashioned” indicators, are now talking about the massive trade surplus that the Eurozone enjoys with the world, but in particular with the US.

LatAm Elections: The Lure of the Left

Our London-based Emerging Market fixed income analyst predicts increased volatility ahead for Latin American markets due to the threat of Leftist election victories this year, but that pro-market reforms will still progress.

House View: Continued Global Economic and Equity Reflation

Our updated view remains positive on the global economy and equity markets even as global bond yields rise a bit further. Our SPX target remains near 3000 by year end, with impressive gains elsewhere too.

Global Fixed Income & Credit Outlook - March 2018

A broad-based synchronized recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Asian Fixed Income Monthly Outlook - March 2018

In February, US Treasuries (USTs) succumbed to a further sell-off, with yields rising across the curve prompted by better US economic data.

Italian Elections: More of the Same Political Dysfunction

Poor economic and fiscal policies are, and will likely be, a recurring theme in Italian politics. However, from a trade perspective, we see Italy to remain a good carry/spread trade for at least the next twelve months against a backdrop of improving GDP growth in 2018 and 2019.

Global Fixed Income & Credit Outlook - February 2018

A broad-based synchronized recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Asian Fixed Income Monthly Outlook - February 2018

There was a sharp rise in US Treasury (UST) yields in January on the back of positive macro news, steady rise in oil prices and speculation that central banks in developed markets will start winding back on stimulus measures.

Australian Household Debt — The Economic Cost of High House Prices

Over the past 15 years Australian house prices have been on an incredible run, resulting in Australian households becoming some of the most indebted in the world. So what is the economic cost of Australia’s sky high property prices and what could it mean for property prices in 2018?

Global Fixed Income & Credit Outlook - January 2018

A broad-based synchronised recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Asian Fixed Income Monthly Outlook - January 2018

As widely expected, the US Federal Reserve (Fed) raised interest rates by 25bps in December, its third rate hike this year. It also raised its GDP forecast for 2018.

2018 Emerging Markets Outlook

Our Senior Portfolio Manager for Emerging Markets in London forecasts that in 2018, this asset class could well match 2017’s achievement.

2018 Developed Markets Outlook

For 2018 and beyond, we see a story of central bank policy normalization and foresee the global economy growing in a similar fashion to how it did in 2017: low growth coupled with comparatively low inflation data.

2018 Global Credit Outlook

We see the key investment themes to drive performance in Global Credit in 2018 to be similar to last year. We have developed our investment themes: Long US High Yield, Long Chinese Tier1 SOEs, Long European Hybrids, Long European Financials, Long Rising Stars.

Asian Credit Outlook 2018

We expect the economic backdrop for Asian credits to remain constructive in 2018, but remain cognizant of several risks including rising interest rates, robust supply, unexpected weakness in China, geopolitical developments and cross-asset volatility.

2018 Asian Rates and FX Outlook

The global recovery is expected to continue, albeit at a more moderate pace. Meanwhile, we foresee policy normalisation and an acceleration of inflation in Asia.

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