Conventional approaches to fixed income investing rely on bond yields to generate returns. Most of the returns come from accumulating portfolios of bonds to harvest yield.
2019’s rampant bond rally came to a halt this month as bond yields rose, causing bond prices to fall across most major bond markets.
Following the sharp sell-off in Q4 2018, credit markets globally have performed strongly in 2019. Having seen a big dip, followed by a quick rebound, how are we now left?
Liquidity is one of those things that doesn’t get much focus until it’s too late.
Recent inflation readings in Australia and the US have reinforced the strong consensus view that inflation will remain very low for a long time.
With global bond yields back near the low end of recent ranges, it’s an opportune time to revisit a theme that’s relevant to portfolio construction today – the bond vs. equity correlation.
In a theoretically efficient fixed income market, closely related bonds (or derivatives) with similar risk characteristics would always be priced the same. In reality, these prices persistently diverge from each other, which means fixed income markets are inefficient.
We discuss which chart we are watching closely and what it means to us and investors.
What does the yield on a 3 month US T Bill have to do with the price of a holiday in Argentina? Plenty, if you follow the chain of events that have driven capital flows since the 2008 financial crisis.
Investment grade (IG) credit has been one of the worst performing asset classes so far this year, and its largest segment – USD IG credit – has been the worst hit.