Monthly report
Slower easing prospects worry markets, despite scope for rate cuts
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Overview
Central bank caution and an inflation uptick drove a long end sell-off in January, as markets re-assessed how quickly rates will fall. China and EM bonds proved safer havens, as did credit, despite high issuance. Middle East tension has not yet driven safe haven buying of government bonds, or major damage to supply chains.
Key highlights:
- Macro and policy backdrop – Realisation the case for a rapid easing cycle is unclear?
- Yields, curves and spreads – Modest bear steepening as curves adjust to central bank caution
- Credit and MBS analysis – Credit spreads tightened further as government yields rose, and credit proved a safer haven
- Sovereign and climate bonds – Green bonds recover after duration-led sell-off in sovereigns in 2022-2023
- Performance – Longs gave up some Q4 gains in January. Credit, China and EM bonds held up well in sell-off
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curve and credit spreads, across sovereign, inflation-linked and corporate indices, and FX-adjusted return performance using proprietary month-end data from our global fixed income indices.
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