Fixed Income

At this late point in the cycle, fixed income investors are on high alert for signs of potential excess in the capital markets, and a proposal for potentially the biggest leveraged buyout (LBO) in history would certainly fall into that category.

At TwentyFour Asset Management we believe Environmental, Social and Governance (ESG) factors can have an influence on the value of our investments, and we have recently formalised our approach to these risks by integrating an ESG framework throughout the firm’s investment process, across all strategies.

The Senior Loan Officer Opinion Survey, combined with financial results from the banks, is probably still the most useful tool we have for gauging the cycle’s life expectancy.

A number of threats to risk assets have dissipated and could become positive tail risks for markets moving into 2020.

"The European CLO market is much smaller, but given the US is further ahead in the economic cycle, the US market can provide a good indication of what might happen in Europe."

Markets appear more confident the UK will avoid a ‘no-deal’ Brexit, but this isn’t feeding through to rate rise expectations. TwentyFour Asset Management's Ben Hayward examines why.

So is there any Brexit premium left at this juncture? We certainly believe there is.

For us, it is the insight into the US economy and the strength or weakness of their customers, that we find most interesting in the banking results, and especially so when the US economic data is increasingly pointing to a slowdown.

It is not clear to us just how much more monetary easing will placate equity investors, and we see a real risk that when we enter the third quarter earnings season next week, company specific data from the bottom up will be more of a shock than the macro picture has been.

"We think the downside to markets is still underappreciated, and thus we would prefer to stay long protection."

The active versus passive management debate is well documented, but with ESG or sustainable investing the debate takes on a new dimension.

When Mario Draghi unveiled the European Central Bank’s latest stimulus package earlier this month, the restarting of quantitative easing with €20bn per month of government bond purchases took most of the headlines.