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The biggest bond bets the pros are making

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After a grim 2022, there has been plenty to like in fixed-income markets over the past 18 months or more: high income, a gentle tailwind from falling inflation, a benign economic environment with minimal defaults. Investors have been able to sit back, relax, and collect their coupons. However, there are signs that this cheery outlook may be at risk.

For some time, the assumption has been that inflation would continue to drop, giving central banks scope to cut interest rates. This is good news for bond market prices. At the same time, policymakers across the US, Europe and UK appeared to have engineered a soft landing for their economies, making recession – and therefore a rise in default rates for companies – unlikely.

There are now a number of risks to those assumptions. It is not at all clear that inflation will drop much further from here, Moreover, if Donald Trump in his second term in the White House delivers on his promises of reduced immigration, tax cuts and tariffs, prices could start to edge higher. Even though interest rates are dropping, longer-dated bond yields are still rising because the markets believe inflation may revive.

Corporate bond spreads – the reward investors receive for taking a risk on a corporate bond rather than a government bond – are at their lowest level since the 1990s and seem to imply little risk of default. While there is no immediate risk of recession, there are concerns that the bond market is complacent about the risks in the global economy. Is this really the strongest environment for 30 years?  

This is a more fragile backdrop for bonds and, as a result, fund managers are being more careful in their allocation. Even in tougher environments, bond fund managers have a range of levers to generate returns. They can vary the interest-rate sensitivity of a portfolio. In general, longer-dated bonds are more sensitive to interest rates than shorter-dated bonds, so if a fund manager wants to ensure that they are not exposed to variations in interest rates, they will tend to prefer shorter-dated bonds.

They can also be careful on their credit selection. Even if valuations for the corporate bond market look ambitious, there will be sectors and individual bonds that look better value. Fund managers can also look at different regions – euro-denominated bonds may be better value than dollar-denominated bonds, for example. They can also take advantage of short-term volatility, and bond markets have been particularly noisy over the past year.

Interest rate exposure

Many bond fund managers are now reducing the interest-rate sensitivity of their portfolio by targeting shorter-dated bonds. Nicolas Trindade, senior portfolio manager with the Active Sterling Credit team at AXA Investment Management, says: “We see value at the shorter-dated end of fixed-income markets. There is not much incentive to move into longer-dated bonds because we aren’t getting any additional yield.” He says this is true in both government and corporate bond markets.

He believes that longer-dated bonds could start to lose value. At the moment, the market is implying that interest rates aren’t likely to be any higher in future than they are today. Trindade believes this will change – short-term rate expectations are likely to fall as central banks cut rates, while longer-dated bonds are likely to rise as government borrowing rises.

A rise in government borrowing is the inevitable consequence of social shifts, such as an ageing population, defence spending and climate transition, says Trindade: “Most of that government borrowing will be done at medium or longer-term rates. That will be a technical factor pushing long-term rates higher.” In the US, the burgeoning budget deficit will require a lot of issuance as well.

Kaspar Hense, senior portfolio manager in the investment grade team at RBC Bluebay, is also positioned for rising yields (and falling prices) among longer-dated bonds, believing that Trump policies delay any rally in yields. He thinks yields on 30-year Treasuries could reach 4.75%-5.00% before the end of the year from their current level of 4.6%.

He also sees some difficulties in the UK, with the requirement for higher wages in the public sector weighing on inflation. He thinks inflation could be as high as 3% over the next two years, with wages the major contributor. This will put pressure on longer-dated bonds.

Donald Trump and Elon Musk Getty

Donald Trump with Tesla CEO Elon Musk. Credit: Jeff Bottari/Contributor/Getty Images

Credit selection

The current caution among fixed-income managers is also evident in careful credit selection. Trindade is looking at bank bonds, which are trading at wider spreads than other corporate bonds, but also in distressed areas such as the UK water sector. “We need to do our credit work, but Thames Water’s problems have hit the whole sector. It’s a re-run of real estate sector in 2022 where you have a couple of bad apples and that hurts everyone.”

Tom Hanson, fund manager on the Aegon High Yield Bond fund, is taking a similarly cautious and selective approach. He says: “We are focused on some higher-quality, higher yielding, short-dated bonds. It’s about shutting up shop, and holding as much as possible in defensive income-generative bonds.”

He says they are looking at individual credits, and the structure of each bond, adding, “it is possible to own a very short-dated bond in what seems to be a very cyclical sector. We have an overweight to real estate companies, which is a relatively recent position and have been careful to avoid areas such as autos, which have been weak.”

Hanson is also being careful on the fund’s country positioning. For example, he has a higher weighting in Europe relative to the US and also some exposure to emerging markets. He is also finding a lot of cheaper bonds in the UK. “International buyers aren’t that interested in the UK. Ever since 2016, there has been a risk premium put on the UK. That creates opportunity. Bonds are dated capital. An equity can stay cheap forever, but with a bond, all you need is the maturity date to come around.”

Wary of Trump effect

Aza Teeuwen, manager on the TwentyFour Income Ord (LSE:TFIF) fund, says there are nerves around the Trump effect: “We are sticking close to home, and staying in shorter-dated assets. We have moved into higher-quality and more liquid bonds. We’re not necessarily nervous around defaults, but if we’ve learned anything, it’s that markets can be volatile.” Among the highest weightings in the group’s MI TwentyFour AM Dynamic Bond fund are Nationwide, Barclays and Phoenix Group bonds.

The group also favours asset-backed securities (ABS), where yields are higher. This part of the market is floating rather than fixed rate, so had been expected to do badly as interest rates fell, but as interest rate expectations have been revised higher, the sector has done well.

Shalin Shah, senior fund manager on the Royal London Corporate Bond fund is also targeting the ABS market. It is a relatively small part of the major bond indices, so it is not an option for all investors. He says: “A lot of money is commoditised in corporate bonds. A lot of exchange-traded funds (ETFs) need to buy on ratings and issue sizes. This creates anomalies and can stretch valuations in the well-known companies.” The ABS market suffers from the opposite effect, and this makes yields more attractive.

He says that investors need to be careful on covenants, and how much protection they get if a bond defaults. He says: “Ratings only tell you the likelihood of default. They don’t tell you how much you get if something starts to go wrong.” The team prefers allocations to secured debt, which sits higher up the capital structure in a company. This gives them a seat at the table in the event of a default. Like TwentyFour, Royal London Asset Management favours the financial sector with HSBC, M&G, Aviva and Legal & General bonds among the top 10 holdings on the fund.

Fixed-income managers are cautious, sticking with shorter-dated bonds where interest rate risks are lowest, and being extremely selective on the type of corporate bonds they hold, and the countries they hold them in. They are looking at ABS, or financial bonds, where valuations look more appealing and they can secure a higher income. This is a fragile moment for fixed-income markets and selectivity is increasingly important.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.

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Hungria para proibir grupos pró-democracia, meios de comunicação recebendo ajuda dos EUA | Notícias de direitos humanos

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Hungria para proibir grupos pró-democracia, meios de comunicação recebendo ajuda dos EUA | Notícias de direitos humanos

Sob Orban, a Hungria, há anos, promulgou repressão às ONGs e à mídia independente do país.

A Hungria está liderando uma repressão às ONGs e meios de comunicação que operam no país que recebem financiamento dos EUA e de outras fontes internacionais.

Um aliado do presidente dos EUA, Donald Trump, o primeiro -ministro da Hungria, Viktor Orban, disse que seu governo estava “alinhado” por meio de organizações que receberam assistência financeira dos EUA.

Sob Orban, a Hungria, durante anos, promulgou repressão às ONGs e à mídia independente do país, aprovando leis que os críticos argumentam procurar estigmatizar e dificultar grupos que fornecem proteção para mulheres e minorias, oferecem assistência legal e de direitos humanos e exponha a corrupção oficial.

“Agora é o momento em que essas redes internacionais precisam ser retiradas, elas precisam ser varridas”, disse Orban. “É necessário tornar sua existência legalmente impossível.”

A decisão de Trump de desmontar o Agência dos EUA para Desenvolvimento Internacional (USAID), A agência encarregada de fornecer assistência humanitária no exterior, apenas encorajou o presidente húngaro. Ele elogiou o fator de financiamento de Trump, alegando que essa ajuda havia sido usada para financiar organizações que procuravam “derrubar” seu governo.

Orban disse que as pessoas que trabalham para organizações que receberam Financiamento da USAID poderia ser considerado “agentes”.

“Todo o dinheiro proveniente da América deve ser tornado público, e aqueles que o recebem devem ter sanções promulgadas contra eles”, disse Orban.

Em 2023, o governo de direita de Orban lançou o Escritório de Proteção à Soberania, uma autoridade encarregada de investigar organizações e meios de comunicação que considera estar exercendo influência estrangeira.

Sob Orban, a Hungria foi acusada por numerosos corpos locais e estrangeiros de grave retrocessos democratas, com a UE retendo bilhões em financiamento para o país como resultado.



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2 mortos após o avião leve cair em São Paulo – DW – 02/07/2025

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2 mortos após o avião leve cair em São Paulo - DW - 02/07/2025

Duas pessoas foram mortas depois que um pequeno avião caiu enquanto voava sobre o Brasileiro Cidade de São Paulo na sexta -feira.

O Beech F90 King Air caiu na Marques de Sao Vicente Avenue, na Barra Fund e depois bateu em um ônibus.

As autoridades recuperaram os corpos do piloto e do copiloto do avião.

“Infelizmente, começamos o dia com este trágico acidente de avião”, escreveu o governador de São Paulo Tarcisio de Freitas nas mídias sociais

“Vale a pena destacar a ação rápida do corpo de bombeiros, que extinguiu as chamas em apenas alguns minutos e impediu que essa tragédia fosse ainda maior”.

Várias pessoas feridas

Uma mulher que estava viajando no ônibus foi levada para o hospital com ferimentos.

Enquanto isso, um motociclista também foi levado ao hospital depois de ser atingido por um equipamento.

Quatro outros foram hospitalizados com ferimentos leves, informou o corpo de bombeiros em comunicado.

Editd by Darko Lamevic



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Trump deve manter apenas 611 funcionários na Usaid – 07/02/2025 – Mundo

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Trump deve manter apenas 611 funcionários na Usaid - 07/02/2025 - Mundo

A gestão do presidente dos Estados Unidos, Donald Trump, manterá 611 trabalhadores considerados essenciais na Usaid, de acordo com um comunicado enviado aos funcionários da agência de ajuda externa americana na noite de quinta-feira (6) e compartilhado com a Reuters.

A cifra é maior do que o número de 300 funcionários que seriam mantidos relatado anteriormente à agência de notícias, mas ainda representa um corte drástico na equipe da Agência dos Estados Unidos para o Desenvolvimento Internacional, que contava com 10 mil trabalhadores até o começo do ano.

A principal agência de ajuda humanitária de Washington, que em 2023 apoiou iniciativas em 160 países, tem sido um dos principais alvos de um programa de redução de custos liderado pelo bilionário Elon Musk. Os cortes entrarão em vigor à meia-noite desta sexta, diz o aviso.

Musk lidera o Departamento de Eficiência Governamental (Doge, na sigla em inglês), iniciativa que, apesar do nome, não é um departamento propriamente dito, e sim uma equipe dentro do governo. Ela foi desenhada para buscar maneiras de cortar gastos federais.

Uma ação judicial apresentada na véspera, porém, busca reverter a desmontagem agressiva da Usaid. O litígio busca uma ordem temporária e, eventualmente, permanente da Justiça para restaurar o financiamento do órgã, reabrir seus escritórios e bloquear novas ordens de dissolução.

O desmonte ocorre em meio a um enorme programa de rescisão do governo Trump, que pressiona os funcionários a deixarem seus empregos em um esforço sem precedentes para reformar o governo federal. A ofensiva também faz parte da política conhecida como “América Primeiro” de Trump, que ordenou um congelamento global na maior parte da ajuda externa dos EUA, impactando grupos humanitários de todo o mundo.

Hospitais de campanha em campos de refugiados na Tailândia e programas de distribuição de medicamentos para quem sofre de doenças como o HIV estão entre as iniciativas em risco, que incluem organizações brasileiras.

No ano fiscal de 2023, a Usaid gastou cerca de US$ 38,1 bilhões (mais de R$ 222 bilhões) em serviços de saúde, assistência a desastres e outros programas, o que representa menos de 1% do orçamento federal americano.



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