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Business Times
05-07-2025
- Business
- Business Times
Managing risks and finding opportunities in fixed income
IN THE current economic landscape, global fixed-income markets face significant uncertainty and volatility. Investors are contending with fluctuating growth rates, inflationary pressures, and unpredictable policy decisions. Tariffs and diverging macro policies across regions add complexity to the investment environment, necessitating a strategic approach to managing risk and identifying opportunities. Investors are concerned primarily with the implementation of macro policies. The current policy environment, especially in the US, is marked by significant uncertainty, leading to increased market anxiety. Central banks are downgrading growth expectations and are likely to continue gradually cutting rates. However, the US Federal Reserve is expected to lag behind other central banks in adjusting monetary policy. On the fiscal side, the reconciliation Bill in the US is under significant scrutiny for its future fiscal deficit implications, potentially impacting market dynamics, capital flows and the American currency's strength. Concerns over US debt levels and potential volatility are shaping the global fixed-income market. The substantial amount of public debt raises questions about leverage and transparency in these markets. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Investors are wary of crowded trades, which could trigger forced selling and rapid unwinds of leverage, creating challenging conditions – particularly in the illiquid over-the-counter fixed-income market. US downgrade and de-dollarisation Macroeconomic uncertainty is anticipated to peak in late summer, coinciding with the release of hard data and the resolution of debt ceiling negotiations. The recent downgrade of the US by Moody's poses a longer-term philosophical question rather than a present danger to Treasury investors, initiating discussions about its implications. It may not significantly alter daily investor activities – particularly as two other large rating agencies have also downgraded the US – but it requires adjustments for some institutional clients with guidelines on AAA securities. It challenges the conventional view of what constitutes a flight to safety or quality, as the US Treasury market is traditionally seen as the epitome of safety, and raises questions about what determines the nature of risk-free assets. The greenback will be under more pressure than Treasuries, but be wary of being materially underweight given the downward correction to date. The secular path towards de-dollarisation may be difficult to change, meaning the currency may remain under long-term pressure. Reducing trade deficits in the US will also reduce the capital surplus, leading to fewer dollars going out of the US, and therefore fewer dollars going back into investments there. Despite this, it is too extreme to conclude that the greenback will lose its reserve currency status any time soon as there are few, if any, viable alternatives. Plus, the majority of global contracts are denominated in US dollars. Being short, the US dollar is a crowded trade, and there may be upside surprises in the face of an economic downturn. Tight valuations put a premium on liquidity to make the most of future opportunities. A period of lower growth and overall lower inflation is supportive of investment-grade credit, but spreads have generally recovered most of the wider moves since the end of the first quarter, so we are comfortable with long, albeit defensive, exposure in this market. Given the asymmetry of risk-adjusted returns when spreads are considerably tight, maintaining liquidity in portfolios is key to taking advantage of potential future dislocations in the market. Positioning is stretched in many areas of the market, and an unwind of crowded trades could lead to some disruption due to the more illiquid nature of fixed-income markets. Portfolio positioning The global fixed-income market offers a broad universe for investment. European markets are drawing interest due to favourable valuations and continued rate cuts by the European Central Bank. Emerging markets present opportunities, particularly in regions with agreeable rate paradigms. Within the US, certain segments such as asset-backed securities and short-duration high yield remain attractive, with the Fed likely to be slower than other central banks to reduce rates. Capitalising on these opportunities requires a strong bottom-up research approach to identify good credits and manage downside risk in a volatile environment. Investment grade While spreads have fallen almost to pre-Liberation Day levels and reduced dispersion, specific opportunities are emerging across sectors in both Europe and the US. Utilities are particularly attractive due to their relatively cheap valuations, despite significant issuance driven by the push for decarbonisation. The need for substantial capital expenditure in utilities and potential growth from advancements in artificial intelligence and increased energy demands are likely to provide interesting investment opportunities, especially through the new issue market. Similarly, European banks, especially subordinated debt, are gaining interest due to strong stock performance and anticipated European economic growth from infrastructure and defence investment plans. They have also lagged somewhat in the recent recovery rally. Defensive sectors such as capital goods, food and beverage, and healthcare continue to offer better visibility and cash-flow generation, making them preferable over cyclical sectors such as retail and autos. Emerging market debt Emerging market hard-currency debt has traditionally been viewed as a less risky option compared to local currency debt due to its lower volatility and risk profile. However, hard-currency spreads have recovered the widening, and outperformed other credit asset classes such as high yield. Given the weakness in the US dollar and the attractiveness of some local rates markets, we are finding interesting risk-adjusted return opportunities in this area. Regional diversification within emerging markets is essential for optimising returns and managing risks. For example, Latin America could offer attractive investment opportunities due to upcoming electoral cycles that may result in favourable macro policies. Duration Globally, there are various opportunities to be long duration, depending on the country and part of the curve. In the US, the five-year and 10-year Treasury curves are attractive, while in Australia and South Korea, the front end of the curve is more appealing. European exposure – particularly in periphery markets such as Spain, Italy and Greece – provides still-attractive carry, with occasional interest in some supranational issuance, in particular the European Union at the long end of the curve. In the United Kingdom, both the front and long ends of the curve are attractive. This diversity in fixed-income markets allows investors to capitalise on dislocations and opportunities across different curves and regions. Stay focused and flexible The global fixed-income market is experiencing heightened uncertainty and volatility due to macroeconomic factors and policy decisions. This environment presents risks but also opportunities for investors who can strategically manage these challenges. A strong research focus and adaptability to changing conditions are essential for identifying attractive opportunities and mitigating risks to capital. Staying focused and vigilant about potential risks while being flexible in investment strategies is crucial for effectively navigating the evolving market dynamics. The writer is co-chief investment officer of fixed income at MFS Investment Management
Yahoo
08-06-2025
- Politics
- Yahoo
Congressman McClintock, restore staff and services at Yosemite National Park
Yosemite National Park is one of California's most valuable public assets economically, ecologically, and culturally. Recent executive decisions have led to significant staff layoffs and service reductions, disrupting park operations and putting local communities at risk. These cuts impact more than just tourism. They affect jobs, small businesses, and regional stability, particularly in areas that rely on visitor traffic and park accessibility. In light of this, the lack of timely, proactive engagement from Congressman Tom McClintock is concerning. Strong leadership is critical when national resources and local economies are both on the line. It is the duty of elected officials to safeguard public lands and ensure they remain supported, accessible, and well-maintained for future generations. Constituents and concerned Californians should contact Rep. McClintock at (202) 225-2511 to demand swift, concrete action to restore staffing and services at Yosemite. Lauren Gonzalez-Perez, Lynwood Clovis residents need to question the actions lately taken by the Clovis City Council because of the main issues its members seem to fight for, like LGBTQ books at the Clovis Library, sanctuary and immigration laws, teenage trans athletes and other issues. Many Clovis resident seem to not know what is transpiring or not care. We see this when it is time to vote. I think the cty of Clovis has more pressing problems, like housing, school lunches, utility prices, Marjorie Center, overcrowding and the list goes on. What should the role of the City Council be? What concerns most Clovis residents? Are our streets safe for children walking or riding their bikes to school every day? There is no doubt Clovis a is one of the most desirable cities in California, but I think residents need to decide what kind of city they want and are the most important issues facing it today. Steven Trevino Jr., Clovis I'm not so old that I have forgotten the halcyon days when public officials, appointed and elected, at every level of government took their bribes behind closed doors in smoke-filled rooms. Now, it is perfectly acceptable to solicit and receive bribes in the open, in front of everyone. And no one seems to care. What a country. Jim Doyle, Fresno Did you know there are hundreds of clean energy projects slated to happen in the Central Valley from IRA investments? But if the Senate passes the reconciliation Bill without the clean energy tax credits, we stand to lose thousands of jobs and billions of dollars in the Valley alone. The investments spurred by clean energy tax credits will go a long way toward improving our air, controlling electricity rates and stabilizing our climate chaos. Cuts will hurt many of us if they become law. A rollback of tax credits for home upgrades like rooftop solar would also be a blow to all of us who've been using these tools to cut energy bills. Incentives have made it easier for homeowners to install solar panels, save money, and even help stabilize America's power grid. But those benefits — and the local businesses that depend on them — are in jeopardy if Congress moves forward with these cuts. Throughout the country, Republican-led districts are especially benefiting from investments in manufacturing, solar, wind, hydrogen fuel and battery storage projects. But there is pressure to vote along party lines. Call or email your senators. Ask them to work harder across the aisle to help constituents. Andrea Farber De Zubiria. Fresno Now I have to say I'm confused: Fresno Unified Superintendent Misty Her used artificial intelligence to make up some accusations against others. Is this a new skill FUSD will be teaching our children — how to use the plagiarism-generation machine to create fake documentation of crimes that never happened? How can we expect this woman to lead our children in their education when she cannot even follow the most basic instructions for writing in FUSD, which are 'Cite Your Sources' and 'Don't Plagiarize'? Why would we want to send our children to schools where the administration are purposefully and maliciously being defiant against the teachers they love and trust to teach them? Washington, D.C. may be a circus right now, it doesn't mean we have to follow suit. Shape up, FUSD — the parents and future teachers are watching you. Kathleen Osle Eugene. Fresno The longer and warmer days bring more traveling. Freedom comes with following laws. When I was 16 in 1992, I was hit by a drunken driver. Medical care and therapy in the Bay Area and Central Valley made up half of my teenage life. After three decades, I communicate with a deep tone, read lips, cannot drive and I walk unsteadily. Look at the results of the Independence Day weekend maximum enforcement period for 2023 and 2024: CHP made 1,224 DUI arrests in 2023 and 1,336 DUI arrests in 2024. Drivers, please make DUI arrests come down this year. Anyone's independence can be ruined if you drive drunk. Many holidays are coming. Memories of a crash, injuries or even death caused from drunken driving will haunt your future. Foods and drinks are part of the fun. Taking Highway 33 to head home from a festivity? Planning to drink? Go ahead, but don't forget to have a sober person drive you if you become drunk. This certainly shows your pride for freedom and people will admire your safety. Freedom and safety go hand in hand. Lori Martin, Tracy
Fox News
23-05-2025
- Politics
- Fox News
Dems call budget bill ‘bureaucratic water torture' as GOP ‘glad to have the ball in our court'
Print Close By Charles Creitz Published May 23, 2025 Senate reaction to the House's passage of its "big, beautiful bill" was sharply divided, with Democrats warning of long-term harm to the working class and Republicans arguing it would help that very group. "Republicans' reconciliation bill dismantles the American Dream and strips health care, food assistance, and more away from millions of hardworking Americans," Senate Minority Whip Richard Durbin, D-Ill., fumed in a Thursday statement. "Republicans are taking a chainsaw to critical services that American families depend on and using them as a piggy bank for tax breaks for the ultra-wealthy." Durbin, who is retiring after a four-decade career in office, quipped that billionaires "win" and American families "lose – all thanks to President Donald Trump." REPUBLICANS READY LATE-NIGHT SESSION ON TRUMP'S 'BIG, BEAUTIFUL BILL' AFTER GOP MUTINY The number-two Democrat urged four unnamed Senate Republicans to break with their party and have the "good sense to join Democrats" to stop the bill from reaching the White House. Two Republicans unlikely to heed that call were Sens. Roger Marshall of Kansas and Lindsey Graham of South Carolina, who both offered a "well done" verbal back-pat to House Speaker Mike Johnson, R-La. Marshall said the Senate must deliver the bill to Trump for America's betterment, as Graham cited the border security provisions in the legislation and welcomed the bill to his side of the Capitol. Back in Durbin's camp, Senate Majority Leader Chuck Schumer, D-N.Y., took to the Senate floor to condemn the "dead of night" vote and claimed Republicans hoped "nobody would notice" their "rotten to the core" bill. Schumer was up late Wednesday, unsuccessfully forcing about a half-dozen motions-to-recess or adjourn as the Republicans held the Senate open to begin the process of undoing California's emissions waivers granted by former President Joe Biden. DEMS WARN HOUSE REPUBLICANS WILL PAY PRICE AT BALLOT BOX FOR PASSING TRUMP'S 'BIG BEAUTIFUL BILL' Senate Majority Leader John Thune, R-S.D., pointed Fox News Digital to recent comments on the bill, in which he said its goal is truly to "make life better for people so they can afford to pay their mortgage, they can afford to put gas in the car, and afford for their groceries." "That's why we're doing this. This is part of our comprehensive economic plan," Thune said. Sen. Tammy Baldwin, D-Wis., echoed the "cloak of darkness" sentiment to Fox News Digital, saying the bill will "terminate health care for nearly 14 million Americans" and is "not what the people of Wisconsin signed up for." "You can bet I'm going to fight it," Baldwin said. Meanwhile, Sen. Ronald Wyden – the Oregon Democrat and ranking member of the Finance Committee – called the bill a "full-scale assault on Americans' health and safety." "This bill means kids will go hungry, seniors will face greater abuse and neglect in nursing homes, people with disabilities will lose care at home, and millions of working Americans will be subjected to humiliation and bureaucratic water torture just to get health care," Wyden said. "Millions will lose their health insurance, and many more will find it harder to get health care, leading to untold suffering and quiet deaths," Wyden added. Maryland Democrat Angela Alsobrooks told Fox News Digital on Thursday that the Big Beautiful Bill Act will account for the largest food stamp cuts in history. "[It's] beautiful for whom? Certainly not the millions of Americans who rely on SNAP to feed their children and on Medicaid to get their health care," Alsobrooks said, adding the GOP seems "obsessed" with seeing the "poor getting poorer and the rich getting richer." Alsobrooks said the majority of her fellow Old Line State residents agree with her sentiments. Sen. Peter Welch, D-Vt., echoed Alsobrooks' concerns about SNAP and Medicaid. "It's a terrible bill and every senator should reject it," Welch said. CLICK HERE TO GET THE FOX NEWS APP When reached for comment, fellow Vermonter Bernie Sanders directed Fox News Digital to a 20-minute floor speech the democratic socialist made a few days ago. "At a time when the richest people have never had it so good, they see Republican leadership working overtime to make the billionaire class even richer," Sanders said. "At a time when a majority of Americans are struggling to put food on the table and pay for health care, they see Republican leadership making life even more difficult for average Americans." Sen. Katie Britt, R-Ala., said conversely she is grateful to Trump and Johnson for their "diligent work." Senate Judiciary Committee chairman Chuck Grassley, R-Iowa, said that the Senate will carefully consider the House's final product and work to craft final legislation that meets the chamber's rules and prevents the "biggest tax hike in American history," if the Trump Tax Cuts were to expire. New Jersey Sen. Andy Kim released a video message to constituents about the passage on Thursday, calling it one of the most dangerous bills in history. "I want you to pay attention," he told Jerseyans, citing "disastrous things" in the legislation. Thune and Senate Finance Committee Chairman Mike Crapo, R-Idaho, are expected to make changes to the bill, but they hope to keep them minimal to preserve the "delicate balance" struck by the House, Thune said. The upper chamber hopes to have the final product to Trump by Independence Day. Print Close URL
