Where to find value in bonds after the 'taper tantrum'

FIXED INCOME

Last month was painful across all fixed income sectors and we saw equities retreat too as a result of investors' ‘taper tantrum'.

July has seen a reversal in certain fixed income sectors’ fortunes. Central bankers around the globe have been quick to reiterate our investment team’s belief that tapering of the Fed’s QE programme does not mean a tightening in monetary policy, and that we can expect a zero interest rate policy for the foreseeable future. With value being created, buyers have been enticed back into markets and, although government yields have not fallen, spreads in corporate and high yield have retraced about 60% of the widening seen during the two previous months. Uncharted territory It is worth i...