2022 was a disastrous year for bond markets. Then, 2023 produced a rollercoaster ride before finishing in positive territory. As we enter 2024, Marc Stacey explains why European corporates look attractive to investors.
A rollercoaster ride
Most fixed income investors were glad to see the end of 2022, looking to 2023 as a bit of mean reversion after the worst performance the 60/40 portfolio had ever seen. 2023 started relatively well but became increasingly bumpy as the year went on – then finished in positive territory thanks to the last two months. Moving into2024, rate volatility has subsided, and we are witnessing an increasing interest in fixed income. Central bank policymakers’ messages that rates have peaked and, if anything, are moving slightly lower have bolstered traditional long-only investors, who are starting to re-engage with fixed income. Their interest is in investment grade, and we are starting to see those fund flows.