Fixed Income Analysis /

Bond Market Monitor: Bonds Are Back

  • 10 months + since Russia invaded Ukraine and there is yet no end to the war in sight

  • The negative 2/10 spread generates a conviction that the world is heading into recession next year

  • Inflation could slow down. Slower than expected rate hikes provide a bullish case for bond investments

Warut Promboon
Warut Promboon

Managing Partner - Credit Research

29 December 2022
Published byBondcritic

In this report, we revisit all the indicators we pointed out in our last BMM. We believe even if the war ends this year, hostility between the West and Russia/China will continue for years, if not decades. In addition to arms races, we believe the stand-off will lead to inefficient production and rising costs of production, in general. Rising costs and slowing demand will lead to a decline in the corporate EBITDA in the near term. In addition, rising rates and slowing growth will lead to more defaults, especially in high-yield credits.