Market Views

GLOBAL CREDIT BULLETS | Monday, 4 December 2023

Fixed income – What a comeback
November was one of the best months for global bond markets in history, as weaker US data and dovish Fed-speak cleared the path for easier financial conditions. Bloomberg’s US Aggregate Bond index finished +4.5%, the best month since 1985, while the Euro Aggregate finished  +2.7%, its fourth best month since inception in 1998. Following these returns, we believe the outlook into year-end is more balanced. Key drivers in December include NFP this week which consensus expects at 190k versus 150k prior, followed by CPI and the Fed meeting next week.

Eurozone inflation – On track for target
Inflation surprised to the downside in November, as headline fell from 2.9% to 2.4% and core from 4.2% to 3.6%. The fall in inflation was broad-based, whereby the -0.9% monthly drop in service prices was particularly notable. Both prints were 30bp below consensus, and fuelled further rate cut pricing: Markets now expect the first 25bp cut by April, and 115bp in total for 2024 (on par with the Fed). Inflation markets price HICP to fall below target by August 2024, but we believe the ECB can already cut sooner.

Algebris Investments’ Global Credit Team

This document is issued by Algebris (UK) Limited. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Algebris (UK) Limited.

Algebris (UK) Limited is authorised and Regulated in the UK by the Financial Conduct Authority. The information and opinions contained in this document are for background purposes only, do not purport to be full or complete and do not constitute investment advice. Under no circumstances should any part of this document be construed as an offering or solicitation of any offer of any fund managed by Algebris (UK) Limited. Any investment in the products referred to in this document should only be made on the basis of the relevant prospectus. This information does not constitute Investment Research, nor a Research Recommendation. Algebris (UK) Limited is not hereby arranging or agreeing to arrange any transaction in any investment whatsoever or otherwise undertaking any activity requiring authorisation under the Financial Services and Markets Act 2000.

No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris (UK) Limited , its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.

The distribution of this document may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. This document is for private circulation to professional investors only.

© 2023 Algebris (UK) Limited. All Rights Reserved. 4th Floor, 1 St James’s Market, SW1Y 4AH.