Fixed Income

Natixis Asset Management foresees growth picking up in the euro zone, aided by an everaccommodating ECB, even if global growth should remain moderate again this year...

Volatility and absence of momentum in 2016 mean a tactical approach is needed, says Christophe Donay, Chief Strategist at Pictet Wealth Management

Since the 2008 crisis, central banks have had a major influence on financial market trends. The Bank of Japan (BoJ) in particular has orchestrated a historic rally among Japanese equity markets since announcing its quantitative and qualitative easing strategy (QQE) at the end of 2012.

The risk concentration index (RCI) for a diversified portfolio had been on a downtrend since the start of 2014. The latest risk aversion spell has brought this to an end. This index, which measures the diversity of risk sources, peaked when markets were mainly guided by the perception of the Chinese risk and by the re-emergence of a systematic risk.

According to René Defossez, Strategist at Natixis, it seems reasonable to assume that, to begin with, the European Central Bank will endeavour to keep the 10-year nominal swap as low as possible, which means that the breakeven swap will remain deep in negative territory. However, it is also likely that the breakeven swap will remain very volatile, maybe more so, given the change in the global environment...