Fixed income commentary
Physical gilts have generally offered a yield pick-up over equivalent swap-based exposure. Yet this premium has declined over the past two years as pension funds have continued to invest heavily in gilts to match liabilities. Let's consider how much this premium might have to fall for investors to swap bonds for swaps.
We expect the market and macroeconomic environment this year to be determined by the degree to which tightening financial conditions impact heavily indebted borrowers.
As seasoned trustees of pension schemes will know, it’s possible to target better long-term outcomes by actively switching between gilts and interest rate swaps. But could it also sometimes be prudent to make changes within your swap exposure?
The European Central Bank’s programme of quantitative easing looks to be almost over. Should European credit investors be worried or encouraged?
Large investors like LGIM play an important role in financing housing associations. With their operating landscape continuing to evolve rapidly, and with the Grenfell Tower tragedy at the forefront of our minds, what are our expectations of the housing associations we invest in?
‘Tis the season for giving thanks, at least in the world’s largest economy. But after the market routs of the last month – driven by US stocks, no less – there is precious little to be grateful for in some commentators’ eyes. Enter duration, which has been helping to give the protection we all crave, so long as you’re long, that is…
Investors entering retirement may be tempted to look to higher-yielding assets to boost their income. But could this result in greater concentration risk? And might dividends be more stable than equity volatility implies?
Five months is a long time in Italian politics. Back in June, we observed that Italy was too big to fail, but also too big to bail. We were also waiting for the almost inevitable clash with the European Commission over the budget. That has now arrived and we have started trading Italian risk in the new higher range for spreads. * (Bubbling Tensions in Politics)