César Pérez Ruiz shares his top 3 investment themes of the month
Short-term investment-grade credits.
The rise in bond yields globally is making high-quality bonds look ever more attractive. In exchange for limited duration risk, short- and medium-term investment-grade (IG) bonds offering good yields and issued by solid companies can be found in a range of sectors. Furthermore, short-term IG Asian bonds in hard currency continue to offer good levels of carry in return for limited credit risk.
We continue to like the Canadian dollar and Norwegian krone, commodity currencies backed by credible central banks and solid economies. Both currencies stand to benefit from the steadying of oil prices, with moves by Norway to replace Russian natural gas supplies to Europe a further reason to be optimistic.
Long the Japanese yen.
While the Bank of Japan’s continued adherence to yield-curve control entices us to remain short Japanese bonds, we believe prospects will improve for the beaten-down yen. Japanese assets have become progressively cheaper along with the yen and Japan could be one of the few major economies to avoid recession.