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How central banks obscure bond market risks* Thumbnail

How central banks obscure bond market risks*

How central banks obscure bond market risks — a closer look from Manulife Investment Management’s Canadian Fixed Income team 

 

Senior portfolio managers Roshan Thiru and Dan Janis discuss how unprecedented central bank intervention has obscured looming risks for fixed-income investors, and how investors can prepare for what’s next.


Read the article from Manulife Investment Management’s Canadian Fixed Income team:

How central bank emergency measures have obscured looming bond market risks →


Key takeaways

  • As the novel coronavirus spread, the lockdowns that became a standard part of the policy response playbook ravaged both markets and economies with startling speed.
  • Central banks around the world reacted swiftly and aggressively, intending to restore much-needed liquidity, especially within the fixed-income markets.
  • Policy success has come with an uncertain cost, as many traditional mechanisms for assessing risk in the fixed-income markets are now broadcasting distortions.
  • Going forward, we believe prudent fixed-income investors will need to rely much more heavily on portfolios that can be both dynamic and active in terms of country, sector, and security selection, as passive allocations appear more vulnerable to shocks than they have in years.




*Manulife Securities related companies are 100% owned by The Manufacturers Life Insurance Company (MLI) which is 100% owned by the Manulife Financial Corporation, a publicly traded company. Details regarding all affiliated companies of MLI can be found on the Manulife Securities website at www.manulifesecurities.ca.

 

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