Threadneedle: Wo sich Erträge am Anleihenmarkt finden

Core fixed income markets are offering lower potential returns at a time when risks in a multitude of guises persist. Does this reflect complacency? Is it evidence of increased risk-taking to meet unrealistic return targets, or is it a positive response to the deflationary forces that are appearing globally? Are all fixed income markets the same? While yields are certainly low, spreads in corporate bonds are not far removed from the long-term norm and in high yield and emerging markets there may be an opportunity in shorter-duration corporate debt and higher-yielding sovereigns.

Following a year in which the UK government bond market generated total returns of over 14%, investment grade bonds over 12%, European high yield around 6% (in euro terms) and US dollar-denominated emerging markets around 6%, it is difficult to imagine that returns in 2015 will be as strong. Yields are very low both in historical terms and in relation to present and expected rates of inflation, yet dangers persist, both geopolitical and economic. 

We have identified some themes within the market:

1. Investors may be complacent about the outlook for interest rates in 2015

Central bank policy has supported global markets with the combined balance sheet of the G4 central banks (the Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England) expanding massively in recent years. Meanwhile, market expectations of where interest rates will be by the end of 2015 have moved meaningfully lower from where they were a year ago. Indeed, it is getting hard to imagine that investors could become any more dovish than is now the case, about prospects for interest rates. Thus, markets are discounting one rate increase in the US by the end of 2015, and no increases in interest rates in the UK until mid 2016, while neither is any move expected in the eurozone or Japan.

2. Declining inflation has supported bond market

The decline not only in inflation but also in inflation expectations was one of the main driving themes of 2014 and it partly explains why core bond markets have moved so strongly. The huge decline in oil prices, with Brent falling from over US$140 a barrel in 2007 to around US$55 today*, is responsible for some of the fall in inflation and inflation expectations. A lack of aggregate demand in some regions and the absence of any significant sign of wage inflation, even in economies with reasonable growth, such as the US and UK, have added to these disinflationary pressures. Consequently, the contrast between the fortunes of the providers of labour and the owners of assets are meaningful as property, bond and stockmarkets have continued to perform strongly.

Die vollständige Analyse im pdf-Dokument