Brighter Times for Bonds? Where to Look, What to Do in 2023

Last year was a tough one for bonds but now things are changing. Opportunities are out there. Our latest fixed income insights reviews recent events, assesses where the market is heading and outlines where investors should be looking.

What makes sense to invest in now?
What should you hold off on?

• As policy rate cuts come into view we expect yield curves to move from inverted to flat and ultimately to steepen over the coming quarters.
• US Treasury market is more advanced on this journey, while European markets may take longer as central banks deal with more intractable inflation. European investors can take advantage of relatively attractive rates and short-end yields.
• We prefer sovereign exposure to credit and favour investment grade over high yield for now. Emerging Market Debt may be at a turning point for those with the risk appetite.
• The policy trade-off between controlling inflation and inflicting unnecessary economic pain rages on — expect choppy bond markets.