Gov Sovereigns/Treasurys

This Special Report introduces a framework for assessing the relative importance of slope change and initial yield in curve trade performance. The yield penalty for curve steepeners has fallen significantly since the beginning of the year, and we recommend shifting out of Treasury curve flatteners and into Treasury curve steepeners in US bond portfolios.

In this report, we present our quarterly review of our Model Bond Portfolio. The anti-growth bias of the portfolio allocations hurt the portfolio performance in Q1/2024 as global growth surprised to the upside. However, we anticipate some recovery of the underperformance in our base case scenario for the next six months.

Contrary to conventional wisdom, most leading indicators suggest that the US labor market is weakening, including our very own “Mel rule.” After being overweight stocks last year, we moved to neutral at the start of 2024, and are now putting equities on downgrade watch with the expectation of shifting them to underweight later this year.

At today’s monetary policy meeting, the ECB gave strong hints that rate cuts will begin as soon as the next meeting in June. In this Insight, we share our thoughts on today’s meeting and discuss the implications for European bond yields and the euro.

In this insight, we calibrate our investment views based on the latest Bank of Canada decision.

Our reaction to this morning’s CPI report and bond market moves.

Our reaction to this morning’s employment report and bond market moves.

Our Portfolio Allocation Summary for April 2024.

Italy is no longer Europe’s problem child. Investors will be better off reassessing their views of Italian assets, which represent a buying opportunity on a structural time horizon.

We expand our risk/reward analysis of US investment grade corporate bonds to focus on the 44 industry groups included in the Bloomberg index.