January 2017

Fixed income – The year ahead and how we plan to manage it

Kamyar Hazaveh's picture

A look back on 2016

Last year was a volatile environment for both safe haven and risk assets. Deflation and risk-off dominated the first half damaging credit markets that led to new lower lows in global sovereign bond yields. Since mid-summer, indicators of U.S. and global growth and inflation have been in an uptrend lifting bond yields. This note lays out our fixed income outlook1.

The environment – We focus on cyclical developments in the economy

Regime Change 2.0

Eric Bushell's picture

In the summer of 2016, Signature argued that markets were approaching a regime change.  A multi-year deflationary impulse was fading and a reflationary turn was at hand. Commodity prices had stabilized and growth dynamics were improving along with financial conditions in the banking sector and credit markets. Populist political risks, exemplified by Brexit in late June, drove politicians worldwide to abandon austerity in favour of fiscal spending. Monetary policy alone was out of bullets but coupled with fiscal action wo