japanja
Fixed income outlook: Upside bounce, downside risks

Fixed income outlook: Upside bounce, downside risks

06-01-2020 | 四半期アウトルック

Fixed income returns have been excellent in 2019. Secular trends which have supported performance will remain in place – and indeed intensify – in the 2020s.

  • James Stuttard
    James
    Stuttard
    Head of Global Macro team and Portfolio Manager, Robeco
  • Michiel de Bruin
    Michiel
    de Bruin
    Portfolio Manager Global Macro Fixed Income

Speed read

  • Credit growth suggests a near-term bounce, but recession risks remain
  • After a year of beta tailwinds, it is time to get active in fixed income…
  • …with a barbell of short-end US Treasuries, EUR IG, Italy and Spain
クレジットに関する最新の「インサイト」を読む
クレジットに関する最新の「インサイト」を読む
配信登録

Business cycle: a small China-driven bounce, but end-of-cycle risks

We view the Chinese economy as key to the global business cycle. Recently, Chinese leading indicators have improved. The credit impulse, for example, which measures the change in the flow of new credit to the private sector as a percentage of GDP, has turned positive. There is a correlation between the credit impulse and global business confidence, even if there are also other influences on the latter. Both the OECD Leading Indicator and PMIs have risen off their lows, too

While markets have become more optimistic recently, we expect the bounce in Chinese credit to be more muted than in 2012-13 and 2015-16. Ongoing corporate defaults suggest China stimulus will be both modest and ultimately ephemeral.

The overall picture for the European economy remains one of modest, though seemingly stabilizing, growth. Consumer spending is decent, but there are signs of slower momentum in the labor market. Weakness in manufacturing has already spilled over to the labor market and to services in Germany.

The US should benefit in the short term from a lift in sentiment in the aftermath of the headlines of the ‘Phase One’ US-China trade deal. Still, we see plenty of end-of-cycle characteristics, which pose downside risks to growth. Growth is predominantly driven by consumer spending. Business investment remains absent and CEO and CFO confidence surveys caution this could remain the case. Corporate profits are eroding as labor costs are on the rise and we see a growing risk that cost cutting could start to have an impact on the labor market. However, macroeconomic and market trends have been slow this cycle, so the pace of this process will probably fit that template.

Trade and politics: big picture tariffs, 2020 election

The composition of the White House’s proposed December 2019 tariffs were self-damaging for US interests, as they would have hurt the US consumer ahead of an election year. So we should perhaps not be surprised by their recent repeal in the ‘Phase One’ deal. Yet for all the hoopla around the recent agreement, average economy-wide US-China tariff levels are still higher than the levels which so roiled markets in August 2019.

CEO and CFO confidence may well be linked to the challenge of making large long-term investment decisions amid such a fluid trade landscape. Their desire for stability will be hampered for most of 2020 by what looks to be a closer-than-usual White House contest. Uncertainty over who will win the November election may start to dominate markets from midyear. In the interim, we have the Democrat primaries in March. Who could go full steam ahead with corporate investment with both the geopolitical and domestic political windscreen so fogged up?

In the UK, the next election is now likely to be in 2024, following the convincing Conservative electoral win. This takes the rolling domestic uncertainty and parliamentary stasis of the last twelve months off the table. In terms of negotiating the future relationship between the UK and the EU, however, it is only the end of the beginning, to paraphrase Churchill. There is still scope for disagreement over the details and timing of trade agreements, and progress could be slowed by protectionist stances in front of specific domestic audiences and by insecurity in Brussels over large countries successfully leaving the EU. Still, we note that it took a hard deadline to concentrate minds – leading to compromise – in October 2019, so some tight deadlines are probably a harsh necessity in 2020.

Monetary policy: ECB continuity, Fed clinging to the ‘three cuts’ narrative

The guidance from the Fed and ECB has been clear: both institutions prefer to remain on hold for the time being, and for both the bar to hike rates looks high. A pronounced rise in underlying inflation could spoil that outlook, but we expect core inflation in these economies to remain close to current levels.

Time to get active in fixed income

Fixed income returns have been excellent in 2019, as they have for the last 3, 5 and 10 years. As yields have fallen and spreads tightened, the consensus view has consistently been to call time on the duration trade and look for higher yields.

But the consensus has missed the structural trends: the demand for duration-matching at pension funds and life insurers, the demand for income from an ageing society, and a need for capital stability in retirement. These secular trends will remain in place – and indeed intensify – in the 2020s.

With all that said, we do not expect the same total returns in 2020 as in 2019. That means a far more active approach is required – in curve, country and credit. We can identify areas that we like for 2020, but it is also important to choose areas on which to be cautious, following such strong total returns.

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会