Fixed Income Regains Balance After a Turbulent Start to the Year
After a volatile first quarter driven by geopolitical tensions, fixed income markets have stabilised. This webinar explores what has changed—and what it means for credit and returns going forward.
Geopolitics Shaped a Volatile Start
In this quarterly update, Head of Fixed Income Svein Aage Aanes joins host Stale Frausing to reflect on market developments. The first quarter was marked by significant volatility following geopolitical tensions in the Middle East, which triggered a surge in energy prices, rising interest rates and widening credit spreads across global markets, including the Nordic region.
A More Constructive Second Quarter
Market conditions improved notably in the second quarter. Interest rates stabilised, with a slight decline in Europe and the Nordics, while US rates moved somewhat higher on stronger growth expectations. Credit spreads tightened again, reversing much of the widening seen in March. This normalisation provided a supportive backdrop for fixed income performance.
Diverging Inflation Dynamics
A key theme has been the divergence between Norway and Sweden. In Norway, higher-than-expected inflation has led to upward revisions in rate expectations. In contrast, weaker inflation in Sweden has dampened expectations for further rate hikes. These differences help explain the varying rate movements across the region.
Credit Markets Show Resilience
Investment grade spreads have largely normalised, although sectors such as real estate and industrials have lagged somewhat. Nordic high yield markets, meanwhile, have remained relatively stable overall. Strength in energy- and shipping-related sectors has supported the Norwegian market in particular. Performance has improved accordingly, with the Nordic corporate bond fund delivering around 1.5% year-to-date, recovering earlier losses and outperforming comparable short-duration European benchmarks.
Looking Ahead
With markets stabilising, carry is once again a key driver of returns. In the webinar, the portfolio manager provides deeper insights into the outlook for rates, credit and positioning in the months ahead.
