Bond Voyage

With a series of shocks hitting the emerging-market sovereign bond universe in recent years, investors need to be alert to the danger individual countries’ debt is being placed in the wrong risk bucket and mispriced, argues Carmen Altenkirch.

China looks set for a rapid economic rebound in the first quarter after finally abandoning its zero-COVID policy. But will the recovery prove temporary as longer-term dynamics reassert themselves?

We take a visual approach to explain what’s happening with bonds, equities and oil.

Oliver Judd and Betty Sanchez Torres argue that despite a recovery in prices, banking sector securities continue to offer value so long as a deeper recession is avoided.

Despite ongoing market volatility and geopolitical uncertainty, 2023 could bring attractive opportunities for fixed-income investors, says Barney Goodchild.

James Vokins and Chris Higham from our credit team believe the path of inflation will remain the central question for investors in 2023. Fixed-income investors should remain cautious until that path is more certain, but fundamental analysis can still uncover attractive opportunities.

Our liquidity team give their take on what the challenging market environment means for positioning in 2023.

After a bruising 12 months, our emerging-market debt team anticipates an improvement in the asset class’ fortunes in 2023 as declining inflation allows central banks to ease back on monetary tightening. But with many issuers still at risk of default, investors will need to tread cautiously.

After the volatility that rocked UK markets in recent weeks, Alastair Sewell reflects on how this impacted money market funds and what’s next.

Pessimism was in the air at the recent IMF/World Bank meetings, with emerging markets looking vulnerable to a tightening of global financial conditions. However, their orthodox policy responses should put many countries in a stronger position to meet those challenges than previously, argue Carmen Altenkirch and Nafez Zouk.

Recent events in the UK are a reminder of the benefit of a globally diversified sovereign bond allocation and avoiding home bias, as Kurt Knowlson and Steve Ryder explain.

European regulators are set to introduce significant reforms to money market funds. Investors need to be ready, says Alastair Sewell.