Fixed income outlook: Japan tactical, UK gilts cautious (with Tom, Oli)

explicit

NDX

RUT

Oil

Metals

USD

M&G Investments 7.5
Asset Manager $390.00B
Andy Chorlton 8.5

Fixed income outlook: Japan tactical, UK gilts cautious (with Tom, Oli)

yields

We quite like JGBs a little bit tactically... cautiously constructive. Tactical bullishness on JGBs implies lower yields. For UK gilts, direction is conditional on political stability; a rally (lower yields) is 'plausible' if politics is calm.

1 calls

no reliable edge (random outcomes)

Asks about the Japan trade and JGBs.

Host
Andy Chorlton

We quite like JGBs a little bit tactically. The uncertainty of the budget is out of the way. We're cautiously constructive.

The long end is driven by lifers and pension plans, so you need to be careful about the technicals.
Asks about European bond markets and safe havens.

Host
Andy Chorlton

Germany is probably the one safe haven that still behaves the way you might expect it to.

Clients want diversification, looking at Asian fixed income or international markets.
Asks about France spreads and UK gilts outlook.

Host
Andy Chorlton

UK gilts rally is plausible if politics stays stable. If we get more noise on potential change in leadership, expect volatility.

Once you lose a reputation for stability, it's hard to get back. The UK is still in that process since the disastrous budget.
Asks when debt will start mattering again for fixed income.

Host
Andy Chorlton

I do think debt matters. Governments haven't solved structural problems because it's politically difficult.

There's very little focus on credit risk in the credit market, which trades at very tight spreads despite idiosyncratic risk in equities.

SignalTube

markets at a glance