Multi-Sector Bonds

With a week currently feeling like a long time in geopolitics, the European sovereign crisis at the beginning of the last decade feels even more like a distant memory. The road to recovery for Europe’s periphery economies has been long and windy, but post-Covid it has been surprisingly smooth.

One of the key reasons we see credit continuing to outperform government bonds over the medium term is corporate fundamentals.

With analysts steadily publishing their projections for 2025 (ours are here), the macro variables that tend to get the spotlight are naturally growth and inflation.

With a macro backdrop of falling rates and solid global growth, TwentyFour Asset Management's Eoin Walsh says fixed income investors can expect healthy total returns in 2025.

While the majority of headlines have concerned whether the Fed will do 25bp or 50bp to kick off its cutting cycle, we think this is only one part of the discussion – and not necessarily the most important one.

If you were on vacation last week, your holiday blues wouldn’t have been helped when you looked at your screens this morning, given how quickly sentiment has changed, mainly on the back of one data point.

For any fixed income investors that follow the England football team, the plan for H2 2024 may feel somewhat familiar – no substitutions in the second half.

For the fixed income fanatics amongst us, June was always going to be one for the books with all three of the major central banks meeting, elections, and continued data.

The European Central Bank (ECB) will almost certainly start their rates cutting cycle next month. Supportive inflation data and clear guidance from the governing council has driven market implied probabilities of a June cut to almost 100%, with little in the way to derail that.

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

Since the last Federal Open Market Committee rate decision on September 20, rates markets have sold off very aggressively. And, despite rates being left on hold, the hawkish message, which included the possibility of another hike this year and less cuts next year than previously forecast, was one of the key contributing factors behind the ~55bps increase in the 10-year treasury in the 10 days following that meeting.

Eoin Walsh shares his thoughts following last night's statement from the Federal Reserve, concluding that for now while treasury yields aren’t helping, credit looks attractive based on the rosy economic forecasts.