00:00We are seeing further developments of these Fed succession drama in a big week for central bank
00:06decisions, earnings as well to some extent, and then these headlines crossing the terminal about
00:11Iran putting a proposal potentially on offer in a way that could perhaps give us a bit more
00:17conclusion on the war. How do you read this when it comes to global debt markets? I think yes,
00:23global debt markets have not performed well this year, but if you look at in terms of credit market,
00:27they have at least still given a positive return. If you look at the Asian benchmark indexes,
00:32they are all up about half a percent to one percent. Of course, we are expecting a solid
00:35return this year, thinking that Fed was going to cut two times, but because of the war,
00:40we have seen a pullback in fixed income, but I'm still positive that as long as you are buying five
00:45to six-year bonds, you can still get positive return about five to six percent this year,
00:50just from a carry perspective, because the rates are still very, very high. So generally,
00:54when market looks at that, they say, OK, I still am getting a good return if I put in bonds.
01:00So
01:00that's what we are seeing it. But definitely in terms of duration, we've seen some volatility,
01:05whether it's 10 years or 30 years. But for personally, I am positive. I know a lot of people
01:10are talking about steepener trades. But for me, I prefer flattener trades because I do believe that
01:16if central banks are hawkish, given higher oil prices, then, you know, investors will start looking
01:21and saying, OK, let us buy the long end. And long end still offers value. We have seen a 30
01:26-year
01:26US tragedy not breaking like 5.1, 5.2 percent. So as of now, we're still in a range. So
01:32for us,
01:33personally, if it breaks about five, around five, 5.1, we'll start adding duration.
01:38The thing is, we are expecting central banks to perhaps reiterate that, you know, we don't know
01:44at this stage. The developments in the past 10 minutes or so just reiterate that point.
01:49So how much conviction can there be then in any part of the curve?
01:54Absolutely. I totally agree with you. But at some point, you see, we have US midterm elections. So
01:58we have, we have, I'm not sure that I'm 100 percent confident, but at least the war has to come
02:03to some
02:03kind of solution, maybe a ceasefire for the next six months or nine months until, because I don't think
02:08this is going to completely get over. But at least we'll have some kind of solution between US and Iran
02:13and other forces in Middle East. So I do believe that, yes, you may not have a conclusion.
02:20At some point, there'll be demand destruction against inflation, correct? There's a big fight
02:24or a pull and push whether demand destruction is going to happen. I definitely think that if next
02:29one month, this state of almost is closed, we are definitely going to see demand destruction in
02:34Asia, which may percolate to the rest of the world, whether it's Europe and US. So I feel that push
02:39and pull will keep the bond market where it is.
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