“Despite the growing production, the world is not abandoning. BondI – nor does it threaten that the government deficit will not be financially funded. The long -term US treasury production of 4% to 5% reflects the state of the economy and the fact that low interest rates are behind us. Good news? All of this is potentially good for the increasing profit for bond investors. Before the global financial crisis, the overall global revenue strategy returned was at a limit of 4% to 5% – welcome to this world. “He identifies it. Chris Ego, Chief Investment Officer of Axa IM Core, keeping an eye on the outlook of the stock and bond market.
Markets: This is the time of bonds.
The current bear in bonds explains – IgGO explains – started in September, according to a reduction from 5.50% to 5.0% in FED night rate. It was a bold move, a sign that the Fed believes that it has taken control of inflation. But the market has rapidly seen the move in different ways, and the decline in two rates later has reinforced concerns that inflation is still a threat.
Some believe that the Fed has been very relaxed very quickly, keeping in view the economic situation and the US government’s economic policy, fortunately, the market has better than expected on the back of December inflation data. Correct the extra. Production is still growing compared to December 31, 2024. That’s why bonds are attractive.
Emotion and technical data
Global bonds are also growing from the lowest levels of the last six months. Held UK He performed the worst due to concerns about the ability to attract enough foreign capital to meet the financial point of view and its double deficit. The pound also fell. A weak pound raises inflation concerns and the Bank of England appears to be trapped at the bank rate. The market is expected to reduce only two rates this year, despite evidence that the UK economy is stopping (at a very low pace, GDP has been flat since the end of the first quarter of 2024), while We expect a four -rate reduction in AXA IM. 2025. “
Overall, “Government bonds are getting cheaper than sweeps and corporate credit – a trend that continues. Markets believe that government credit risks are increasing compared to corporations, which are also issuing loans. This year, more than $ 80 billion in grade bonds have been sold in the US primary market. If the banks in the United States move forward to de -regulated, they will need less to have government bonds.
Year of Bonds 3.0?
For the past two years, I have been guilty of propagating the statement.“Year of Bonds”, The expert sheds more light. It was partially awarded the performance, though the rate of interest rates remained high. In Europe, investment grade credit and high -producing markets have been good for two years, and short -term investment grade sterling has also performed well. In short history, low quality credit performed better than high quality, long -date official bonds.
It is good that bond production is high at the beginning of the year: it increases. The possibility of reasonable profit in the asset class. Kerry alone will already be an important contribution.
Points to rates
Market pricing has become more frustrated about the chances of a decrease in the rate.. American rate and UK prices will remain indefinitely between 4.0% and 4.25% – this is good for bonds, if there is no reason to raise prices for the market. Inflation’s view is key: In both the United States and the UK, inflation data in December was better than expected, which led to the increase in over -sail bond markets. In December, the basic inflation was 3.2 percent in both the United States and the United Kingdom. Central banks need to be less than that, but December data is positive in the short term. Energy and Trump’s threats are significant threats to inflation in the near term.
Outlook on credit
Credit Spreads had to be tightened ”“The story of last year. It has allowed credit to improve rates in investment levels and high production markets. The reason for rising rates and not expecting a significant relaxation from central banks – a strong economy – means stabilizing credit spreads in the future. There is definitely a strong demand for credit.
Unless the corporate loan related to integration and acquisition increases, or the increase in revenue is slow to the extent where it endanger the capacity of companies to meet coupon payments, credit markets in 2025 Bond investing in 2025 There should be a source of safe income for cars.
More rates are positive for bond investors.
We have been living in a higher rate environment than in the decade since 2010. Again, this is good for investors seeking bond income, IgGO explained that the period can be organized and hedge, but the bond’s return is stable and capilization should not be ignored. See comment on Bond Markets, the liquidity is good, the demand is strong and the loss of money due to defaults is still a very rare event. We believe that global investors have little room to increase their US equity holdings, especially while performance is likely to be quite focused and market growth is expensive.
I Bond “They offer interesting diversityAnd hopefully it will be able to tackle the challenges of the political comments that have begun to flow since the recent opening of Trump, “he ended.
