Fixed Income – how to face an adjustment period

 

June 2023 | 2 min read  

Fixed Income – how to face an adjustment period 

The crisis in the banking sector and the recent negotiations on the debt ceiling in the US have fuelled uncertainty over the past months. Nevertheless, data points published in May showed that the US economy is more resilient than expected. This has led a relevant number of players in the market to have a rethink on the US interest rates trajectory. 

In this changeable scenario, we think that attractive opportunities may lie ahead.

In our opinion, we have entered a phase of adjustment, where there is the chance to benefit from high yields without sacrificing credit quality. Nevertheless, due to the current lack of visibility, it is crucial to be selective and agile in seizing opportunities:
  

• looking at sovereigns, they could provide compelling yields both in developed and emerging markets. Moreover, unsynchronised central bank actions offers additional opportunities to generate alpha;

• for credit, investment grade should be favoured, as we recognise that corporate results are holding up well in this uncertain context. This is particularly true in the Eurozone, where valuations are still cheap in comparison to historical average;

• we believe that investors should be more cautious on high yield, as we foresee that companies with a more fragile fundamentals profile might suffer over the short and medium term, as a result of the increased cost of capital.

  
At Amundi, we believe in the importance of maintaining a nimble and flexible approach, that includes tools to size risk, as well as adopting instruments to protect capital and damper volatility. This is complemented by our strong track record in exploiting inefficiencies across fixed income segments, aiming to tap value wherever it exits.      

Discover more about our Fixed Income fund offering

Amundi Funds Global Aggregate Bond

Leveraging an active and flexible approach, the fund aims to capture opportunities across the broad global aggregate universe; this is enriched by active currency management, which aims to provide an opportunity to generate additional performance.

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Sources:

¹ Amundi Institute, Global Investment Views – June 2023 – 26 May 2023

Important information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 7 June 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.

Date of first use: 7 June 2023

Doc ID: 2939659