5 Key Themes for 2023
As each year draws to a close, it’s common for investment managers and banks to publish predictions for the year-ahead. In fixed income, these notes tend to be heavily focused on yield forecasts.
At Ardea Investment Management, macro forecasting is not part of our investment process because we adopt a pure relative value investment approach that aims to be independent of the level of bond yields, the broad direction of interest rates and the macroeconomic factors that dominate the performance of conventional investments.
Therefore, instead of the traditional year-ahead forecasts, in this note we discuss the substantial risks around consensus views and highlight 5 key themes that will impact global interest rate markets in 2023:
1. The peak in central bank rates
2. The improved risk/reward balance for duration
3. QT and rising net bond supply
4. Large tail risks limit scope for volatility to fall, and
5. Macro uncertainty supports the RV opportunity set.