What are the new rules of the game?
This year, we are expecting a massive asset rotation out of equities into credit. The acronym “TINA” (There Is No Alternative to equities) appears to be seriously shaken by the new economic environment. In turn, time to embrace FIFA: Fixed Income’s Fashionable Again! As Thomas Delanglade, Partner at Accellency, likes to put it: “These are the new rules of the game”.
Since the pandemic, central bankers around the world had to refocus on taming inflation, resulting in 284+ rate hikes across the globe. Tightening policies revoked the quantitative easing era.
Against the usual negative stock bond correlation that prevailed so far, 2022 proved to be the great reset, with BOTH equities and fixed-income significantly down.
Along higher interest rates, and lower bond prices, fixed-income returns now look poised to bounce back!
The asset class is attracting attention of asset allocators and portfolio managers.