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Fixed Income Monthly October 2021

The global fixed income/credit market fared poorly in September led by increasing expectations of Fed QT/taper and increasing talks at the FOMC of a first interest rate hike.

Asia ex-Japan credit underperformed against other regions mostly led by the Evergrande debacle. Within the region, Chinese credit underperformed in particular which led to the underperformance in the regional benchmark. Other outperformance in the region was not enough to offset the losses in China.

Asia primary markets were brisk in September, printing around USD37.2bn in deal volume as quality issuers looked to take advantage of the still-low rate environment. Demand was good in general.

We generally recommend a conservative/moderate-risk mindset so long as the Evergrande situation remains unresolved. Investors should consider short-to-medium duration IG strategies, and other higher-quality corporate HY outside of China (for now).

UOBKH Fixed Income Monthly Oct2021
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