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Bonds: Shelter in Times of Volatility

Key takeaways

  • Citi analysts expect monetary policy divergence to continue as the Federal Reserve continues to normalize rates while the European Central Bank (ECB) and Bank of Japan (BOJ) keep policy accommodative with policy rate differentials.
  • Citi remains constructive on US Investment Grade (IG) bonds, preferring opportunities in short and intermediate term maturities. US High Yields (HY) bonds are also favoured especially as default rates continue to decline amidst a favourable US economic outlook
  • Within Emerging Market Debt, Citi analysts prefer to be selective and maintain overweights in Latin America (hard currency & local) and Asia hard currency bonds. In Asia, Citi analysts continue to see value in Chinese fixed income given improved liquidity in the property sector. Opportunities can still be found in the core state-owned enterprises and select developers.




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