1. Newsroom
  2. Asset TV: Cautious optimism in fixed income
Menu
UBP in the press 26.05.2020

Asset TV: Cautious optimism in fixed income

Asset TV:  Cautious optimism in fixed income

Mohammed Kazmi, Portfolio Manager & Macro-Strategist Global and Absolute Return Fixed Income at UBP, recently participated in an Asset TV Masterclass discussing which areas of the bond market offer opportunities to investors.


 

Markets and support over the last few weeks 

  • Fixed income has been cautiously optimistic over the past few weeks.
  • Global lockdown measures have meant that infection rates are coming down, giving hope that economies will re-open soon and that growth will rebound, allowing credit markets to normalise following the significant sell-off earlier in the year.
  • There has been unprecedented support from central banks. The Fed has been purchasing corporate bonds for the first time, which has dealt with the liquidity issues from Q1 and there seems to be no limit to what central banks will do to help, which should give investors comfort.

Recovery in China, signs for global data 

  • The next few weeks will show whether global markets generally have seen the worst. 
  • Recovery has not been as fast in China as one would have hoped, according to the latest data.
  • Initially there were hopes of a V shaped recovery, but it is looking more U shaped at best.
  • A fear factor could be at play where many are choosing to stay at home and get take-aways, for example, despite many restaurants and facilities being open.
  • Therefore, we can’t assume a big bounce in the economic data in the West when things start reopening.

Data: Fixed Income, Equities and CDS Indices

  • The data for April and May should be better than previous months, which should be enough for fixed income investors, who need the situation within credit to stabilise to pick up yield and get carry.
  • Macro-economic recovery and earnings need to improve before the equity market can get more comfortable. However, liquidity has improved thanks to central bank action and there is more two-way flow in the credit market.
  • It’s important to be invested in the more liquid part of credit to trade in and out of positions easily. One way to achieve this is through CDS indices to help gain efficient exposure to credit markets and easily trade if the macro scenario changes.
  • CDS indices tend to outperform in moments of stress.
Global & Absolute Return Fixed Income

Kazmi-Mohammed-150x150px.jpg

Mohammed Kazmi
Senior Analyst Portfolio Manager & Macro-Strategist

Expertise

Hedge funds

UBP is one of the longest-standing investors in hedge funds and a leading European player in the sector.


Further reading

UBP in the press 06.03.2023

An eventful start to the year for equity markets

Bilan (22.02.2023) - After 2022 brought an 18% fall in the MSCI AC World index, global markets began 2023 with a rally spanning various asset classes.

UBP in the press 03.03.2023

Higher volatility sparks hedge fund comeback

Bilan - Pierre Novello (27.02.2023) - In 2022, after a lost decade, hedge funds once again saw the turbulent conditions that suit them so well.

UBP in the press 22.02.2023

UBP CEO: The skills private bankers need to survive in 2023

Asian Private Banker (17.02.2023) - Decades ago, private bankers could survive with a limited investment skill set and a good network, but today they have to master several layers of expertise on top of relationship management skills, Guy de Picciotto has observed.