Fixed Income Update: Credit Markets, Government Bonds and Inflation

Co-Head of Strategic Fixed Income Jenna Barnard provides an update on credit markets – noting that the tsunami of new issuance since mid-March appears to have peaked – and offers insights on government bonds and inflation.

Key Takeaways

  • The tsunami of new issuance in credit markets appears to have peaked and credit spreads have held up well, with only modest widening from the tight levels seen in April.
  • When considering government bonds and duration, we would caution investors not to confuse price volatility coming out of the current crisis with a real inflation cycle.
  • We think inflation could distract investors from the big challenge they will face over the next five to 10 years – a lack of reliable income – and believe that selective corporate bond investing could help fulfill that need.

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