Strategic Fixed Income — let’s talk inflation
4 minute watch
Co-Head of Strategic Fixed Income at Janus Henderson, Jenna Barnard, explains how many investors are convinced of a regime shift in inflation and the impact it has had in the bond markets. However, the Strategic Fixed Income Team, while respectful of the current volatility and sharp repricing in the markets, do not see any new information that would change their longer term view on bond markets.
- Bond markets are yet again trading on shifts in ‘narratives’ rather than ‘fundamentals’
- Core inflation has been remarkably stable across developed economies since the late 1990s and will likely remain low because of a number of long-term, structural factors
- Need to be patient for the latest bout of volatility to burn out when good investment opportunities should surface
These are the manager’s views at the time of recording on Tuesday 13 February.
Please read the following important information regarding funds related to this article.
- An issuer of a bond (or money market instrument) may become unable or unwilling to pay interest or repay capital to the Fund. If this happens or the market perceives this may happen, the value of the bond will fall.
- When interest rates rise (or fall), the prices of different securities will be affected differently. In particular, bond values generally fall when interest rates rise (or are expected to rise). This risk is typically greater the longer the maturity of a bond investment.
- The Fund invests in high yield (non-investment grade) bonds and while these generally offer higher rates of interest than investment grade bonds, they are more speculative and more sensitive to adverse changes in market conditions.
- Some bonds (callable bonds) allow their issuers the right to repay capital early or to extend the maturity. Issuers may exercise these rights when favourable to them and as a result the value of the Fund may be impacted.
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- CoCos can fall sharply in value if the financial strength of an issuer weakens and a predetermined trigger event causes the bonds to be converted into shares/units of the issuer or to be partly or wholly written off.
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