What’s on the horizon for Bonds

Messages on July 23rd, 2012 No Comments

What the fund managers say

In this section we look at the House view of one of the leading Fund Managers operating in Ireland and importantly, what’s on the horizon for Government and Corporate Bonds

Government Bonds
US Treasuries – Light
Yields are supported by muted inflation pressures and continued QE purchases, but the increasingly uncertain fiscal outlook and expensive valuations are becoming more of a concern.

European Bonds – Light
Core European bond markets increasingly benefit from safe haven flows and moderate inflation but investors are becoming more worried about the fiscal problems facing the periphery.

Although the weak economic recovery and continued fiscal tightening provide support for the gilt market, valuations have reached expensive levels, while QE worries some investors about future inflation risks.

Japanese Bonds – NEUTRAL

Japanese government bonds are not experiencing the same levels of volatility as in other markets, although low levels of yield deter many global investors.

Global Inflation-Linked Debt – NEUTRAL

While valuations in individual countries need to be examined carefully, the asset class benefits from investor worries about future inflation triggered by easy monetary policies.

Corporate Bonds

Investment Grade Debt – HEAVY
Positive corporate cashflows should enable a renewed decline in historically wide spreads, although the volatility of underlying government bond markets will periodically affect total returns.

High Yield Debt – VERY HEAVY
Although concerns about risks to economic growth have affected valuations, the market benefits from an attractive carry and low levels of default as corporate balance sheets remain strong.

This outlook of potential investment market developments in 2012 (and beyond)  does not constitute an offer and should not be taken as a recommendation. This is  only the view and outlook of one of the Fund Managers operating in Ireland.

Contact Your Local Independent Financial Adviser

Lucas Financial Consulting Ltd is based in Carrickmacross Co Monaghan. As we straddle four counties – Louth, Monaghan, Cavan and Meath we are ideally placed to become your new Local Independent Financial Adviser.

Warning: The value of your investment may go down as well as up
Warning: Past performance is not a reliable guide to future performance
Warning: Funds may be affected by changes in currency exchange rates

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