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Fixed Income

2019-09-03_24-brexit–approaching-the-end-game_teaser
3 Sep 2019 TwentyFour Blog

Brexit – Approaching the End Game

With Brexit uncertainty having ratcheted up a number of notches since Prime Minister Boris Johnson sought to prorogue parliament, yet again investor attention is focused on what impact a hard Brexit could have on sterling assets, and how to best protect themselves from associated volatility. Since the Brexit referendum in 2016, our view has been that safely capturing the ‘Brexit premium’ priced into many sterling assets was a way to enhance value for investors. However, we have always had a cautious view on what Brexit could ultimately look like, and currently it seems clear that the chance of a hard Brexit has increased significantly.
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2019-08-29_24_a-prorogation-of-parliament_teaser
29 Aug 2019 TwentyFour Blog

A Prorogation of Parliament

Yesterday, the Queen approved a request from the Prime Minister, Boris Johnson (‘Bojo’), to suspend Parliament from 10th September to 14th October. This means that when MPs return from summer recess next Tuesday, they could have as few as four days sitting in Parliament before it is suspended again. The Government have argued that this is following procedure – on average a Parliamentary session lasts a year and then is suspended before a Queen’s speech begins a new session – the current parliamentary session has lasted two years. A new session allows the Government to outline its agenda, as well as resetting quotas for certain mechanisms such as Private Members’ Bills.
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2019-08-22_24_an-ecb-rate-cut-will-make-qe-inevitable_teaser
22 Aug 2019 TwentyFour Blog

An ECB Rate Cut Will Make QE Inevitable

The European Central Bank faces quite a conundrum ahead of its upcoming monetary policy meeting on September 12. ECB President, Mario Draghi, has clearly signalled that a cut to the refinancing rate (currently at minus 40bp) is likely and markets are now pricing this in with an 85% probability. The problem is, the ECB has also signalled that it will simultaneously consider tiering the bank reserves this rate actually applies to.
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2019-08-21_24_have-bonds-ever-been-this-expensive_teaser
21 Aug 2019 TwentyFour Blog

Have Bonds Ever Been This Expensive?

The average yield of the bond market today is 1.46%, while its average duration is 7.05 years, going by the widely used proxy of the Barclays Multiverse Index.
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 2019-08-16_24_AAAs-dont-yield_teaser.jpg
16 Aug 2019 TwentyFour Blog

AAAs Don’t Yield 2.3%, Do They?

Rates risk is not something we concern ourselves with too much in the European ABS market, so normally news of inverted yield curves and 30-year US Treasury yields dropping below 2% would largely wash over us. This is because pretty much all ABS bonds are floating rate, so there is no duration. Or is there?
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2019-08-14_WP_five-tactics-for-late-cycle-investing-teaser
14 Aug 2019 Market Update

Five tactics for late cycle investing

The current US economic expansion is now the longest in modern history, and investors globally will be seriously contemplating the end of the credit cycle. This late-cycle period could prove particularly challenging. Mark Holman, chief executive of TwentyFour Asset Management presents five tactics for fixed income investing late in the credit cycle.
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2019-08-15_24_why-the-inverted-curve-is-not-good-news_teaser
14 Aug 2019 TwentyFour Blog

Why The Inverted Curve is Not Good News

Today marked the arrival of a long expected event, namely the inversion of the US yield curve between two and 10 years. This is an important event as historically it has been a very reliable indicator of impending recession. History tells us that once the 2s-10s curve inverts, on average a recession is a year to 18 months away.
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2019-08-08_24_an-italian-summer-renaissance_teaser
8 Aug 2019 TwentyFour Blog

An Italian Summer Renaissance?

Since the two anti-establishment parties (The League and Five-Star) formed a coalition and took control in Italy, markets have been uncertain on the domestic government policy that was promising many things to many people and ultimately creating considerable friction with the European Commission (EC).
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 2019-08-07_24_ABS-summer-synopsis_teaser.jpg
7 Aug 2019 TwentyFour Blog

ABS Summer Synopsis

The embers of the European ABS H1 primary pipeline are now cooling down for the summer break. After a slow start to the year driven by the delayed implementation of new regulations, we saw an increasingly busy pipeline as Q2 developed and became the third busiest quarter of issuance post crisis. July saw almost €20bn equiv. of supply, taking the year to date total to €58bn including a record €19bn in CLOs. This accords with our somewhat contrarian view that 2019 issuance would eventually keep pace with 2018 (a post crisis record). July’s total went a long way in achieving this, bringing YTD issuance just 6% short of the 2018 run rate. In late June this was 28%.
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 2019-08-05_24_global-coordinated-slowdown_teaser.jpg
6 Aug 2019 TwentyFour Blog

Global Coordinated Slowdown Plus Event Risk

August has been a very challenging month so far for risk markets, while in traditional risk off, UST treasuries have seen sharp declines in yield back to the lows last seen in October 2016. We can’t help but think that this sharp adjustment will become more ingrained in August, following 6 months of relatively benign markets.
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 2019-08-05_24_taking-back-control_teaser.jpg
1 Aug 2019 TwentyFour Blog

Taking Back Control

It was a dramatic night last night as the Fed cut interest rates by 25bps, the first cut since December 2008, along with the premature ending to the balance sheet run off – however markets hardly moved!
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 2019-07-25_24_slim-premiums-a-signal-for-caution_teaser.jpg
25 Jul 2019 TwentyFour Blog

Slim Premiums a Signal for Caution in High Yield

Over the past few weeks there has been a noticeable increase in high yield new issuance, bringing a welcome flurry of activity to what has so far been a relatively benign year.
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