The assassination attempt on Donald Trump shouldn’t come as a surprise given his polarising views. Uncertainty can send investors back into safe-haven assets, but the attempt saw US government bond yields rally as markets considered improved odds of his ascendancy.
What I did find surprising was Trump’s choice of JD Vance as his running mate. Vance wrote the excellent Hillbilly Elegy, which I read when it was released. It explains Vance’s upbringing and how poor white Americans once again found hope for a better future with Trump. It’s well worth reading if you haven’t already. Vance is considerably younger than Trump and lacks management experience. It’ll be interesting to see how the campaign runs.
Getting back to fixed income, yesterday, ANZ printed $1.9 billion in a new Tier 2 subordinated bond with an extended 15NC10 term (15 years to final maturity and first call after 10). Demand was huge. On Monday, the initial price guidance was 200bps over semi quarterly swap. The bond launched yesterday with revised price guidance of 190-195bps and printed at 183bps.
Our lead article this week is a new ETF from Global X that invests in bank bonds across the capital structure. It’s a mix of risk and reward and hopes to be fairly short duration while providing higher yields than other alternatives.
Insight Investment seeks alpha (outperformance) by targeting ‘fallen angels’, bonds that were investment grade and drop into sub-investment grade territory. This is a very interesting strategy as the market often overreacts and spreads widen too far, creating opportunities for active managers. This sponsored article explains Insight’s strategy and shows long-term performance against other asset classes.
Expect a gradual and shallow rate cycle says Sonal Desai from Franklin Templeton, who assesses the implications of lose US fiscal policy.
T.Rowe Price is back with its well-read monthly asset allocation strategy update.
