QUARTERLY INSIGHTS | JUNE 2021
FIXED INCOME PERSPECTIVES
Connecting you to the latest thinking from our
fixed income teams.
Themes in Focus
In this quarter’s Fixed Income Perspectives, Global Head of Fixed Income Jim Cielinski and our bond market experts discuss which themes matter most as markets try to determine where we are in the economic and credit cycle and whether central banks will hold the line on being data-driven.
- While structural deflationary trends should ultimately win out, strengthening demand and substantial fiscal stimulus have created a risk that inflation remains stickier for longer. Still, past mistakes are likely to keep the US Federal Reserve from overreacting to near-term strength.
- By replacing lost income, policymakers held the traditional downturn at bay for much of the economy, rushing us past the classic repair phase. While signs of overexuberance already exist in markets, there should be more good news to come.
- The noteworthy shift in the fiscal and monetary policy toolkit – to explicitly protect heavily indebted companies – has far-reaching implications for the pricing of assets and how we manage money.
Explore more insights from our experts in the Perspectives that follow.
Fixed Income Capabilities
Janus Henderson Fixed Income provides active asset management solutions to help clients meet their investment objectives. Over the past four decades, our global investment teams have developed a wide range of product solutions to address clients’ varied and evolving needs. From core and multi-sector investing to more focused mandates, we offer innovative and differentiated techniques expressly designed to support our clients as they navigate each unique economic cycle. The capabilities of these teams are available through individual strategies or combined in custom-blended solutions.
While shared knowledge across teams and regions encourages collaboration and the debate of investment ideas, each team retains a defined level of flexibility within a disciplined construct. Environmental, Social and Governance (ESG) considerations, for example, are a key element of our credit research process and integrated within each team’s investment approach. Our portfolio construction processes are governed by a rigorous risk management framework with the intent of delivering stronger risk-adjusted returns. Further, we believe transparency is the foundation of true client partnerships; we seek to earn and maintain our clients’ confidence by delivering robust and repeatable investment processes and by providing firsthand insights from our investment professionals.
The Janus Henderson Fixed Income platform comprises 102 investment professionals situated in the UK, US and Australia. The teams are responsible for US$79.5 billion* in client assets.
*As of 31 March 2021.
Deflation: A decrease in the price of goods and services across the economy, usually indicating that the economy is weakening. The opposite of inflation.
Fiscal policy/Fiscal stimulus: Government policy relating to setting tax rates and spending levels. It is separate from monetary policy, which is typically set by a central bank. Fiscal austerity refers to raising taxes and/or cutting spending in an attempt to reduce government debt. Fiscal expansion (or ‘stimulus’) refers to an increase in government spending and/or a reduction in taxes.
Inflation: The rate at which the prices of goods and services are rising in an economy. The CPI and RPI are two common measures. The opposite of deflation.
Monetary policy: The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money.
Real interest rate: An interest rate that has been adjusted to remove the effects of inflation.
Risk premium: The additional return over cash that an investor expects as compensation from holding an asset that is not risk free. The riskier an asset is deemed to be, the higher its risk premium.
Sustainable investment: An investment considered to improve the environment and the life of a community. A common strategy would be to avoid investing in companies that are involved in tobacco, firearms and oil, while actively seeking out companies engaged with environmental or social sustainability.