Shifting perspectives in fixed income: focus on carry returns

Emerging market (EM) corporate bonds have faced considerable challenges in recent years, with rising geopolitical tensions, defaults in China’s real estate sector, and elevated global interest rates dampening investor appetite; however, the tide may be turning. A shift in the global interest rate environment – marked by a rate cut by the US Federal Reserve and a fresh economic stimulus package in China – offers an opportunity to revisit this often-overlooked asset class.

The statements in late 2024 from China’s central bank and the country’s Politburo sparked hopes of a ‘whatever it takes’ moment, only to see these dashed, as policy actions have fallen short of expectations.

Infrastructure assets provide essential services to communities, facilitating the transport of people, data, and energy.

Several central banks, including the Federal Reserve, Bank of England, and European Central Bank, have ushered in a new era of rate-cutting, signalling the end to their fight against inflation. But what does this easing cycle mean for asset classes?

Direct lending, the biggest segment in private debt, is now accessible to a broader range of investors and seeing increasing demand, boosted by its superior risk-adjusted returns and attractive features that include speed and certainty of execution.

The attempted assassination of Donald Trump, Joe Biden's withdrawal from the race, and the rise of Kamala Harris: unexpected twists have emerged in the US presidential election.

Our experts examine the tumultuous US election landscape and historical market behaviour during election years, as well as anticipate the fiscal challenges awaiting the next president amidst record-high US federal debt levels.

Driven by Prime Minister Narendra Modi’s economic programme, India has embarked on a phase of infrastructure investment akin to China’s in the 1990s. In our latest edition of UBP Headlines, our Group Chief Strategist Norman Villamin takes a deep dive into the booming Indian market, exploring its investment opportunities.