Bond Voyage

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.

Despite spread widening, defaults in the high yield market have yet to hit significant levels. Will structural changes in the market limit the damage from defaults in future crises?

Emerging markets have been hit by stern economic challenges in 2022. But many companies are proving resilient thanks to strong fundamentals, as our emerging market corporate debt team explain.

Beijing’s ideological battle to stamp out COVID-19 appears increasingly misguided as the rest of the world learns to live with the virus. But the impact of China’s approach will be felt far beyond its borders.

In this month’s instalment of our visual series on topical themes, we look at whether the global economy is heading towards stagflation.

The co-managers of the Aviva Investors Strategic Bond strategy give their views on the outlook for credit markets following the worst first-half in at least 40 years.

Russia’s war in Ukraine has contributed to soaring food prices, supercharging global inflation. Poorer countries will likely be hardest hit, adding to the risk of social unrest. With public finances and incomes already under strain, emerging-market debt investors should be on high alert.

Aaron Grehan and Nafez Zouk from our emerging market debt team explain how the asset class is standing up to some significant headwinds.