Global Matters Weekly – 4 May 2020

Risks and opportunities in fixed income
by Andrew Hardy, CFA

Bonds, issued by both governments and corporates, will always have a significant role to play in multi-asset portfolios due to their inherent stability and reliable cash flows, which provide much needed balance for other riskier positions. However, recent developments spurred on by the COVID-19 crisis should prompt investors to consider deemphasising the focus on government bonds from this point and increasing allocations to corporate credit.

Market Snapshot

  • Positive trial results for COVID-19 treatment and vaccine boosts sentiment
  • European countries plan loosening of lockdown measures and partial reopening of economies
  • Brent crude rose 23.3%, ending the week at $26.4 a barrel
  • Gold fell 1.7% ending the week at $1700.4 an ounce