The recent collapse of Silicon Valley Bank and the subsequent acquisition of Credit Suisse by UBS have triggered concerns about contagion within the broader financial sector and raised questions about global monetary policy.
Central banks now face the challenge of maintaining financial stability while also controlling inflation amid heightened geopolitical uncertainty and the looming threat of a global recession.
This convergence of adverse factors has created an atypical situation for investors.
In 2022, traditionally defensive fixed-income assets such as government bonds and investment-grade credit failed to provide the expected performance during economic contractions. Stocks did not fare any better.
However, recent market trends suggest a potential shift towards a recovery regime, with riskier assets such as high-yield credit performing better. Nonetheless, much depends on the future trajectory of interest rates.
Market participants currently expect a peak in interest rates by mid-2023, with inflation expected to decline and the US Federal Reserve nearing the end of its fiscal tightening.
However, caution is warranted, given that on April 3, Opec and its allies, including Russia, decided to cut crude production by a combined 3.6 per cent of global demand. If high inflation persists, central banks may not hesitate to reduce rates.
The danger is that a prolonged period of high inflation and the resulting central bank response of higher interest rates could lead to an economic slowdown.
This would lead to a further deceleration of the global economy and a continued contraction regime in the coming months, with below-trend growth and a risk of a recession.
Despite these challenges, we believe there are opportunities for investors to find returns in fixed income.
Throughout the current contraction regime, we have adopted a more defensive stance while still recognising opportunities for investors in investment-grade debt and high yield.
Despite the challenges faced by fixed-income assets last year, the higher bond yields, weaker economies and central banks halting rate increases may render 2023 a more favourable year.
The case for high yield and investment-grade credit
It is important to note that US credit spreads widened towards historical norms last year. Even though they remain short of those benchmarks, there is the potential for credit spreads to widen further if economies weaken.
However, we note a recent narrowing as markets start to look forward to an end to central bank tightening and an eventual economic recovery.
Even if we allow for a slight widening of those spreads, our projections suggest that total returns on credit will be higher than that on government debt in 2023.
EM fixed-income assets gain traction
Emerging market (EM) fixed-income assets appear more attractive than their developed market (DM) counterparts, based on the assumption of narrowing spreads. Additionally, we expect that local currency versions of EM debt will outperform hard currency versions, albeit with more volatility, as the US dollar weakens this year.
The Russia-Ukraine conflict has significantly affected the energy mix for European countries, forcing governments to prioritise energy resilience over energy transition in the short term. This has led to a strong performance for oil and gas stocks in 2022.
If Opec and its allies continue to pursue a hawkish approach to cutting production, such stocks will continue to perform well into the medium term.
Fixed income and ESG: The opportunities
Fixed-income and environmental, social and governance (ESG) investments are poised for growth this year — for two reasons.
First, fixed income allows exposure to both countries and corporates, enabling active managers to direct capital to sovereigns with strong environmental policies.
Second, the market is registering increased interest in fixed ESG index exposures, as current offerings are predominantly equity-focused.
Private credit remains a robust option
Private credit remains a robust option for portfolio diversification, offering enhanced income due to exposure to additional credit and liquidity risk. Additionally, private markets provide uncorrelated returns compared to traditional listed equities and bonds, contributing to strong and differentiated income while reducing volatility.
We believe that central banks will not wait for inflation to reach target levels before ceasing rate increases. They will probably require evidence that inflation is trending downwards.
Market-implied rates indicate that major central bank rates may peak in mid-2023, with possible rate cuts by year-end. This further supports a continued weakening of the US dollar throughout 2023.
Geopolitics may pose risk to financial markets
Geopolitical events, such as the Russia-Ukraine conflict, have contributed to a widening of risk premiums across financial assets.
In 2023, stalemates between US political parties and between Russia and Ukraine may continue to dominate the geopolitical landscape, with China-US tension remaining prominent.
Meanwhile, across Europe, polls are indicating that a series of elections could result in Spain shifting towards the centre-right, while Turkey's President Recep Tayyip Erdogan could be defeated in this year’s presidential elections.
While there are local elections across the UK that are expected to serve as a warning for Rishi Sunak’s Conservatives, there are no general elections in any of the G7 or Brics nations — comprising Brazil, Russia, India, China and South Africa — in 2023.
The fixed-income outlook for this year will require investors to navigate a turbulent financial landscape carefully. Central banks' responses to inflation, geopolitical tension and the performance of various asset classes will all play a role in shaping investment strategies.
Despite these challenges, opportunities still exist for investors to find returns in fixed income, particularly within emerging markets, ESG investments and private credit. Maintaining a diversified portfolio will be essential to weathering the storms of an uncertain global economy.
Paul Jackson is global head of asset allocation research at Invesco
Kill%20
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Royal Birkdale Golf Course
Location: Southport, Merseyside, England
Established: 1889
Type: Private
Total holes: 18
MATCH INFO
Karnatake Tuskers 114-1 (10 ovs)
Charles 57, Amla 47
Bangla Tigers 117-5 (8.5 ovs)
Fletcher 40, Moores 28 no, Lamichhane 2-9
Bangla Tiger win by five wickets
Company%C2%A0profile
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Omar Yabroudi's factfile
Born: October 20, 1989, Sharjah
Education: Bachelor of Science and Football, Liverpool John Moores University
2010: Accrington Stanley FC, internship
2010-2012: Crystal Palace, performance analyst with U-18 academy
2012-2015: Barnet FC, first-team performance analyst/head of recruitment
2015-2017: Nottingham Forest, head of recruitment
2018-present: Crystal Palace, player recruitment manager
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Everton 1 Stoke City 0
Everton (Rooney 45 1')
Man of the Match Phil Jagielka (Everton)
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
The%20team
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The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Killing of Qassem Suleimani
HEADLINE HERE
- I would recommend writing out the text in the body
- And then copy into this box
- It can be as long as you link
- But I recommend you use the bullet point function (see red square)
- Or try to keep the word count down
- Be wary of other embeds lengthy fact boxes could crash into
- That's about it
Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
PROFILE OF CURE.FIT
Started: July 2016
Founders: Mukesh Bansal and Ankit Nagori
Based: Bangalore, India
Sector: Health & wellness
Size: 500 employees
Investment: $250 million
Investors: Accel, Oaktree Capital (US); Chiratae Ventures, Epiq Capital, Innoven Capital, Kalaari Capital, Kotak Mahindra Bank, Piramal Group’s Anand Piramal, Pratithi Investment Trust, Ratan Tata (India); and Unilever Ventures (Unilever’s global venture capital arm)
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Company%C2%A0profile
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The%20specs
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More from Neighbourhood Watch
Timeline
1947
Ferrari’s road-car company is formed and its first badged car, the 125 S, rolls off the assembly line
1962
250 GTO is unveiled
1969
Fiat becomes a Ferrari shareholder, acquiring 50 per cent of the company
1972
The Fiorano circuit, Ferrari’s racetrack for development and testing, opens
1976
First automatic Ferrari, the 400 Automatic, is made
1987
F40 launched
1988
Enzo Ferrari dies; Fiat expands its stake in the company to 90 per cent
2002
The Enzo model is announced
2010
Ferrari World opens in Abu Dhabi
2011
First four-wheel drive Ferrari, the FF, is unveiled
2013
LaFerrari, the first Ferrari hybrid, arrives
2014
Fiat Chrysler announces the split of Ferrari from the parent company
2015
Ferrari launches on Wall Street
2017
812 Superfast unveiled; Ferrari celebrates its 70th anniversary
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
Film: Raid
Dir: Rajkumar Gupta
Starring: Ajay Devgn, Ileana D'cruz and Saurabh Shukla
Verdict: Three stars
JAPANESE GRAND PRIX INFO
Schedule (All times UAE)
First practice: Friday, 5-6.30am
Second practice: Friday, 9-10.30am
Third practice: Saturday, 7-8am
Qualifying: Saturday, 10-11am
Race: Sunday, 9am-midday
Race venue: Suzuka International Racing Course
Circuit Length: 5.807km
Number of Laps: 53
Watch live: beIN Sports HD
The years Ramadan fell in May
COMPANY%20PROFILE
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Five expert hiking tips
Always check the weather forecast before setting off
Make sure you have plenty of water
Set off early to avoid sudden weather changes in the afternoon
Wear appropriate clothing and footwear
Take your litter home with you
KILLING OF QASSEM SULEIMANI
Kalra's feat
- Becomes fifth batsman to score century in U19 final
- Becomes second Indian to score century in U19 final after Unmukt Chand in 2012
- Scored 122 in youth Test on tour of England
- Bought by Delhi Daredevils for base price of two million Indian rupees (Dh115,000) in 2018 IPL auction
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
The specs
Engine: 2.0-litre 4-cyl, 48V hybrid
Transmission: eight-speed automatic
Power: 325bhp
Torque: 450Nm
Price: Dh359,000
On sale: now
Elvis
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'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
