Fixed income
5 min read 16 Mar 23
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However, given the scale of these moves we believe fixed income investors go into 2023 on a much better starting point and we see compelling value across many parts of the asset class. For the first time in many years, we believe investors are being well paid to take both credit and interest rate risk. This current window of opportunity is perhaps best illustrated by the fact that corporate bond yields are today all in positive territory – the era of negatively yielding corporate debt is finally at an end.
We would also expect inflation to gradually ease throughout 2023, helped by lower commodity prices, slowing growth and base effects. After a brutal year for fixed income, we think this will allow central banks to slow their pace of rate hikes, which could provide a very welcome tailwind for bond markets.
We think there is especially attractive value to be found in credit, where we believe corporate fundamentals remain robust and expect defaults to remain low. While further volatility is likely in the short term, from a long-term perspective we think credit provides compelling risk/return dynamics.
Past performance is not a guide to future performance
Bloomberg aggregate negative yielding debt in USD trillions.
The value of a fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. Past performance is not a guide to future performance. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. The views expressed in this document should not be taken as a recommendation, advice or forecast.
The content of this page reflects M&G’s present opinions reflecting current market conditions. They are subject to change without notice and involve a number of assumptions which may not prove valid. All information included in this page has been written for informational and educational purposes only and does not constitute an offer or solicitation to invest into any security, strategy or investment product. Information given in this document has been obtained from, or based upon, sources believed by us to be reliable and accurate although M&G does not accept liability for the accuracy of the contents.