The 2014 All-Europe Fixed-Income Research Team: General Strategy, No. 1: James Reid & team


< The 2014 All-Europe Fixed-Income Research Team

James Reid
& team
Deutsche Bank

First-Place Appearances: 4

Total Appearances: 4

Team Debut: 2011

Taking top honors for a fourth straight year is James Reid’s London-based Deutsche Bank trio, which enjoys the same run at No. 1 in Investment-Grade Strategy and repeats in first place in High-Yield Strategy. Reid, 39, “brings an enjoyable humor and personal side to his work,” one supporter in the U.K. reports, “and he’s not afraid to say when his own view differs from the bank or house view.” The Deutsche strategists are fairly bullish, forecasting that spreads will tighten in 2014 and markets will improve as the year progresses. Over the first two quarters, they believe, European fixed income will be unsettled by concerns about monetary policy tapering combined with worries over emerging markets’ volatility and decelerating inflation. In response to these fears — and “because the world is addicted to high liquidity,” as Reid says — the U.S. Federal Reserve, whose actions dictate global economic performance, might struggle to wind down its bond-purchasing scheme as quickly as market participants expect and the European Central Bank could be induced to conduct its own program of quantitative easing. These accommodative policies would ensure higher global liquidity in the second half of the year, his team contends. However, “if central banks struggle to remove stimulus,” Reid cautions, “a bubble could form in the next 12 months” as investors are encouraged to buy riskier assets. Credit markets are not in a bubble now, he advises, but the researchers detect amber warning signs of speculation building.