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Credit Investors Should Proceed Cautiously

Credit assets have sold off in recent weeks in unison with other risk assets, as market concern has shifted from one extreme of growth and inflation running too hot to another of stagflation, or even outright recession. Despite the improvement in credit pricing, we believe investors should be patient when adding to high-beta credit portfolios. […]

May 2022

Government Bond Yields Are Likely to Rise as Central Banks Remove Support

Long-dated government bond yields rose in 2021 on strong economic growth and surging inflation. Central banks have maintained their easy money policies despite the rapid recovery in economic conditions, likely keeping yields lower than they would have been otherwise. This may soon change now that several major central banks are starting the process of dialing back support.

December 2021

Rising Rates and the Implications for Fixed Income

In this paper, we analyze the drivers behind the recent rise in yields and compare the current bond sell-off to major bond sell-offs of the past to assess whether the rise in yields can continue and the implications for fixed income.

May 2021

Playing Defense in a Low-Rate Environment

Investors have predominantly relied on developed markets sovereign bonds for defense in balanced portfolios, but low rates have diminished their diversification characteristics.

January 2021

China's Onshore Bond Market: An Update

Interest in China’s onshore bond market has been rising steadily since the market was thrown open to foreign investors. Yet foreign holdings remain relatively low. We think the market warrants further attention from global investors, given Chinese bonds continue to offer higher yields and lower correlations than those found in other major bond markets, with the potential to bring portfolio diversification benefits.

November 2020

Room to Run for Muni Bonds

In this paper, we aim to assess the potential upside and looming risks for munis in the aftermath of the pandemic-induced muni sell-off and subsequent policy-driven rally. Despite the recent volatility, in our view, munis continue to be an attractive alternative to both Treasuries and high-quality corporates for long-term taxable investors.

June 2020

Finding Credit Opportunities Amid the Coronavirus Crisis

COVID-19 plunged the global economy into a deep recession triggering concern over a surge in corporate defaults. Recent monetary and fiscal stimulus has allowed a rebound in credit assets ranging from high-yield bonds to highly rated asset-backed securities, but other markets remain dislocated. 

June 2020

Life After Zero: Reassessing the Role of Sovereign Bonds with Negative Nominal Yields

Nominal high-quality sovereign bond yields throughout developed markets have plummeted toward zero, increasing the likelihood that most developed markets may soon need to contend with negative yields, and leading investors to question whether high-quality sovereign bonds are still the best form of insurance. In light of these developments, we examine the historical safe-haven characteristics of high-quality sovereign bonds and assesses whether they remain a viable safe-haven asset.

April 2020

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