< The 2014 All-Europe Fixed-Income Research Team Stephen Dulake, Jan Loeys & team J.P. Morgan First-place appearances: 0
Total appearances: 4
Team debut: 2011 At No. 2 for a third consecutive year is J.P. Morgan’s expanded team of 30, co-led since last year by Stephen Dulake in London and New York–based Jan Loeys. The strategists forecast a shift in fiscal policies this year away from austerity, as growth will again be the biggest theme in regional markets. For the euro area they project a weak inflation environment and continued European Central Bank easing. Accordingly, they recommend short-duration securities in that segment and overweight euro bonds against U.K. gilts and U.S. Treasuries. Within the euro zone they favor peripheral countries’ credits over those of core nations and prefer Spain’s Bonos to Germany’s Bund in particular. However, “equity will outperform credit,” Dulake notes, which is a reflection of cyclicality more than corporate behavior. On balance, companies will aggressively buy back shares rather than pursue mergers and acquisitions, the researchers believe. Regardless of asset class, spreads between corporate and government bonds are likely to be little changed year over year through 2014, they say, with total returns remaining subdued, at 1 percent for investment grade and 3 to 4 percent for high yield.