Category Archives:

Panoramic Outlook

2018: The end of the (QE) affair. M&G’s economic and bond market outlook

In our latest Panoramic Outlook, Jim Leaviss assesses the forces behind the robust and broad-based nature of global economic growth in recent months and the prospects for this broadly rosy outlook continuing into 2018. He looks at where we are within the current global deleveraging cycle, and asks how high this means that rates can go. In Jim’s view, the quality of investment grade credit has s…

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M&G Panoramic Outlook: “Responsible Junk” – The challenge of integrating ESG factors into a global high yield Bond portfolio.

Growing awareness of a range of environmental, social and governance (ESG) issues has seen an ever larger number of investors move their focus away from purely financial goals towards an approach that also considers the ESG impact of their investments. Consequently,  a pressing question that faces the asset management industry is how to integrate ESG factors into different asset classes and str…

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M&G Panoramic Outlook: Emerging market corporate bonds – falling default rates and high yields. Too good to be true?

There are a lot of misconceptions about defaults in emerging market (EM) debt. Too often, EM corporates are either considered ‘serial defaulters’ compared with their developed market peers, or seen as a single and homogeneous geography. In reality, default rates follow economic cycles, and having a regional, if not country, approach to default risk remains paramount due to different jurisdictio…

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A whole new ball game. M&G 2017 economic and bond market outlook.

In our latest Panoramic Outlook, Jim Leaviss has a look at the forces that resulted in a tumultuous year for establishment politics, the ECB’s quantitative easing dilemma and the prospects for emerging markets in 2017. For the first time since the financial crisis, it appears that bond yields will come under sustained pressure as central banks gradually remove monetary stimulus. The impacts of …

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Either the demographic bond models are broken, or yields are headed to 10%.

For fixed income fund managers it was once the case that if you understood the evolution of the relative sizes of the various cohorts of the young, the working, and the retired in a population, you could predict bond returns.  Lots of workers relative to the “unproductive” young or elderly meant low wage pressures, lots of demand for savings assets such as bonds, and lower government borrowing….

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M&G Panoramic Outlook: The growing opportunity in corporate bond markets, by Richard Woolnough

Last year proved a tough year for investment grade corporate bonds, with credit spreads moving wider. Fast forward six months to today and the decision of the UK referendum to leave the EU is continuing to shake markets, with European credit spreads now even further elevated. It is nevertheless important to recognise that these bouts of volatility can however present buying opportunities as cor…

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M&G Bond Vigilantes 2016 Macro Outlook by Jim Leaviss

The weather has turned cold, the nights are drawing in and the Christmas lights have been turned on. Not only does the holiday season herald the return of a fat man in a red suit, it is also time for the annual M&G Bond Vigilantes Macro Outlook. Inflation is low, bond yields are negative and global growth is slowing. But things are about to change. The central bank of the world’s largest econom…

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M&G Panoramic Outlook: Quasi-Sovereigns in Emerging Markets, by Charles De Quinsonas

It has been quite an eventful year for emerging markets. The fall in oil and commodity prices, the prospect of higher interest rates in the US, the corruption scandal in Brazil and of course the growth slowdown in China have all contributed to increased uncertainty for the asset class. Naturally this uncertainty has impacted performance, weighing down on returns of both hard and local currency …

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M&G Panoramic Outlook: The Case for Global Corporate Bond Investing

The euro’s 12-year low against the dollar is a mixed blessing for US companies. On the one hand, the US manufacturing sector is suffering from an uncompetitive currency and lower export revenues. But on the other, rock bottom European interest rates have given US companies an attractive opportunity to issue bonds denominated in euros and lock in cheap financing. For example, in the first quarte…

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M&G Panoramic Outlook: Jim Leaviss’ views for the second half of 2015

Deflation. Liquidity. Greece. These are the words of 2015 if you are a bond investor. The year started off with a bang, or rather a break, when the Swiss National Bank (SNB) announced the surprise abandonment of the peg with the euro. This was only a mere week before the European Central Bank (ECB) embarked upon an historic quantitative easing programme. Deflation took hold in Europe, governmen…

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