Volatility one of the biggest drivers of fixed income returns this year

One of the key conclusions of BNY Mellon’s Fixed Income Markets in 2017 report is that political risk, and consequentially volatility, is on the rise.

What’s more, that volatility will be one of the biggest drivers of fixed income returns this year and after almost a decade of inflation rising, it will cause investors to pause and consider its bond implications.

The report is divided into four main chapters. The first sets the scene as managers and economists from across the BNY Mellon investment boutiques Newton, Insight Investment, Alcentra, Mellon Capital and Standish, outline the backdrop for fixed income markets in the opening months of 2017.

Chapter Two sees Newton investment leader, fixed income, Paul Brain assessing duration risk and the likely road ahead for bond market investors. Chapter Three focusses on growing inflation expectations and uncertainty over geopolitics, interest rate movements and commodity prices present new opportunities, and challenges across a range of fixed income investment sectors. Chapter Four explores why a short-dated approach to high yield may offset some of the credit risks and volatility posed by the asset class.

A copy of the report is available here.

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