US

Federal Reserve (Fed) chair Jerome Powell had the honour of kicking off the 2025 season for the major central banks this week, swiftly followed by the chore of having to plead the fifth every time he was asked about a President Trump policy.

It has been two weeks since the primary market for collateralised loan obligations (CLOs) re-opened and 2025 has already proven to be quite a year from multiple angles.

Much of the discussion around inflation over the past few months has centred on the potential for US tariffs, a focus that has only intensified following Donald Trump’s inauguration.

Global rates markets rallied sharply on Wednesday after fixed income investors received some long-awaited good news in the shape of Consumer Price Index (CPI) data for December, which came in below consensus in both the US and the UK.

The latest non-farm payrolls (NFP) data on Friday showed ongoing resilience in the US labour market. To quote the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, “the labor market seems to be stabilizing at something close to a full employment rate.” Is he right?

The Net Zero Banking Alliance (NZBA) has been the flagship climate initiative for banks to advertise their commitment to aligning their investment and lending portfolios with net-zero targets by 2050 or sooner. However, in recent weeks the NZBA has been hit with the withdrawal of all its major Wall Street banks.

It has been a busy start to 2025 in fixed income markets. After the Federal Reserve’s (Fed) hawkish December dot plot, which added fuel to a sell-off in rates last month, you might have thought primary market activity would be more cautious than both issuers and investors would have anticipated a month ago.

Primary market and trading activity may be declining as is typical in late December, but macro data doesn’t sleep, and central banks haven’t got the memo on the wind-down into year-end either with policy meetings at the Federal Reserve (Fed) and the Bank of England (BoE) scheduled for Wednesday and Thursday respectively.

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.

Last week, members of TwentyFour’s asset-backed securities (ABS) portfolio management team were in Dana Point, California for the Opal Group CLO Summit, an annual event with over 2,000 participants made up of investors, bankers, CLO managers, service providers and lawyers.

Thanksgiving week is usually a lighter one when it comes to data releases in the US. Apart from a PCE and core PCE inflation numbers that came in line with expectations at 2.3% and 2.8% respectively, there has not been much data to move the dial. In Europe, on the other hand, there have been a few data releases and central banker interviews that are worth commenting on.

The relationship between government bond yields and swap rates – otherwise known as the swap spread – has been increasingly in focus, with the market’s attention turning to Europe last week as the 10-year German Bund yield traded higher than the 10-year euro swap rate for the first time ever.