What was the biggest shock to the global fixed-income markets in 2023? The U.S. recession that wasn’t, according to the asset classes’ top research providers.
“Global fixed-income markets were dominated by the U.S. growth and monetary cycles this past year,” said Hussein Malik, co-head of global research at J.P. Morgan. 2023 started with the market’s consensus view that the U.S. economy would fall into a recession by the end of year, only to be surprised by its growth resilience—in spite of the cumulative tightening of more than 500 basis points by the Fed.
Which made for an “unprecedented” year for the fixed-income markets and investors, according to Michael Maras, head of global FICC Research and head of EMEA research at BofA Securities. “While the markets were poised for a US growth slowdown that never came, growth proved so resilient that hopes for aggressive Fed cuts had to be abandoned driving us to new yield highs,” he said.
“Hence it was the first year in the history of the United States where Treasuries produced the second consecutive annual loss,” Maras added. Additionally, the majority of the consensus fixed-income and equity macro trades—such as long rates, short USD, short equities, short UK and long China–did not work.
To select the members of our fifth annual Global Fixed Income Team, Institutional Investor solicited the opinions of bond and credit specialists at leading asset management firms around the world. We received responses from 6,740 investment professionals at 1,748 institutions.
Macro sectors were polled by region for the US, Europe, Latin America, Japan, Asia ex-Japan, and Emerging EMEA. Credit sectors were polled for the US and Europe. Additionally, four global sectors were polled.
Participants first rated their top firms in regional sectors on a scale from 1-5, and then separately rated individual analysts or economists/strategists at those firms to create two distinct results for each sector. A numerical score was produced by weighting each vote based on the respondent’s fixed-income AUM for the region voted in and the ratings awarded.
Using those scores, ranks were then determined. Firms/analysts were designated runners‐up when their scores came within 35 percent of the third-place scores.
In the Investment-Grade and High-Yield categories only those analysts who publish independent research pursuant to Regulation AC or as defined by the UK’s Financial Conduct Authority are eligible to be recognized. No such restriction applies in Economics and Strategy sectors.
The individuals surveyed are kept confidential to ensure continuing cooperation. Voters must meet eligibility requirements, and winners must achieve a minimum vote count.