Fixed Income – High Yields over Investment Grades | Harris Fraser
Research Insights
23 January, 2021
Fixed Income – High Yields over Investment Grades

In the last month of the year, most fixed income indexes other than US Treasuries returned positive. Markets stayed stable and positive with anticipation of a status quo, the Bloomberg Barclays Global Aggregate Bond Index and US High-yield bonds gained 1.34% and 1.88%, while US Investment Grades and Emerging Markets US dollar Bonds were also up 0.44% and 1.52% respectively.

Our biggest takeaway from the recent events didn’t come from central banks, but from the one-off event of Georgia runoff elections which took place in very early January. The elections ended with a complete Democrat victory, translating to a full ‘Blue Wave’. This has implications on the fixed income market, as the ever-increasing fiscal deficit will further weight on the Dollar and the long end of the yield curve, long rates could go higher, possibly hampering the performance of investment grades in turn.

Henceforth, we remain selectively positive on fixed income, prioritising quality high yield names which can benefit from the economic recovery and are lighter on duration. We are also bullish on Asian fixed income, largely based on the positive economic outlook and higher upside potential. Asian countries have a better control of the epidemic, and most forecasts have Asian economies at a better spot. Moreover, the current credit spread for Asian credit are also higher than their US or European counterparts, which should be the focus for fixed income this year.

Build Lasting Wealth Today.

ハリス・フレイザーと投資の旅を始めましょう

お問合せ