Does the bond market tantrum signal the end of the bond bull run?

The bond market had a tantrum this week. Bund yields more than doubled. The German government bond index lost 1.5% in total returns. Yields moved higher in Treasuries and UK gilts. Is it the end of the bull market? Is it the start of the bear market? Market behaviour is not conclusive either way, largely […]

2 May 2015 by Chris Iggo

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Flexibility and focus – the key to managing a bond portfolio in a time of suppressed yields

Bond markets suffer from suppressed yields, risk premiums that are insufficient and a lack of liquidity. How do you manage a bond portfolio under such circumstances? One way is to be flexible and to be very focussed on managing exposure to interest rates, inflation, credit and liquidity risk. Being able to invest across the bond […]

25 April 2015 by Chris Iggo

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A bond market in wait and see mode

Bonds have continued to deliver positive returns in 2015. Thanks to the European Central Bank (ECB) and other central banks. Yields in Europe are grinding lower and more of the market has a negative yield to maturity. Our preferences remain for high yield and less liquid fixed income products where there is still some decent […]

10 April 2015 by Chris Iggo

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A successful 5-10 year investment strategy? Not squeezing the last juice from financial assets but hedging against it all going wrong

It’s a wild ride to lower yields. Maybe the end game is yields of -20bp across core markets in Europe, peripheral spreads of 20bp-30bp over Germany and Treasury and gilt yields at new lows. Sounds implausible? Nothing is these days in fixed income. In reality, we are not that far away and another year of […]

20 March 2015 by Chris Iggo

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Core European governments can basically borrow for nothing today. The US and UK look better for bond investors

The proliferation of negative yields in the European bond market means that some governments might be able to borrow, through bond issuance, more than they will need to pay back (zero coupon, issue price above par). For others, particularly in the periphery, QE should help improve debt sustainability through lowering coupons at a time when […]

28 February 2015 by Chris Iggo

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QE mania still dominates the bond market

QE has reduced term risk premiums in a number of government yield curves. That means to be a long term investor in government bonds you either “have to be one” or you have to believe that interest rates will not go up very much for a very long time. If you don’t believe in secular […]

13 February 2015 by Chris Iggo

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How low can bond yields go?

There seems to be an inevitability about lower government bond yields. People are falling over themselves trying to forecast just how low they can go, a process that has been made more difficult by the fact that some parts of the bond market have negative yields now. That means if you buy them today and […]

31 January 2015 by Chris Iggo

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Swiss franc surges free. What does it mean for credit markets? Plus a radical idea for UK politicians

Wow, Zurich is really expensive now  –  The power and influence of central bank engagement in financial markets was vividly illustrated this week by the decision of the Swiss National Bank (SNB) to abandon its policy of preventing the Swiss Franc from appreciating against the euro. The outcome is well known by now – a […]

16 January 2015 by Chris Iggo

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