US
The biggest effect on fixed income markets has come with Federal Reserve tapering initiated in December 2013. The bid yield on 10 year US treasuries has improved from 2.06 per cent on March 11 2013 to 2.77 per cent a year later.
IRELAND
In January, Moody’s upgraded Ireland’s sovereign debt rating to Baa3 from Ba1 and its outlook to positive. On March 13 the National Treasury Management Agency had its first 10-year government bond auction since 2010.
JAPAN
The Bank of Japan is maintaining its strategy of monetary easing, including the purchase of Japanese government bonds at an annual pace of roughly 50trn yen. It aims to achieve a price stability target of 2 per cent.
PORTUGAL
Portugal has seen one of the largest compressions in its 10-year government bid yields, dropping from 6.05 per cent in March 2013 to 4.4 per cent a year later. Ratings agencies have put the outlook for the country as positive.
UK
The Bank of England says falling unemployment is unlikely to push it into raising interest rates before it is ready. The bid yield on 10-year UK gilts has risen from 2.03 per cent in March 2013 to 2.78 per cent a year later.
CHINA
In March, Chaori Solar Energy, a 1bn Yuan Chinese corporate bond defaulted. But the BofA Merrill Lynch Global Research team suggests “a systemic crisis requires a string of low-probability bad outcomes.”
Fraser Lundie is co-head of Hermes Credit
