A strong start to the year has been fuelled by hope that the global economy is heading for a soft landing. Can the momentum be maintained, especially in the face of challenges such as the potential return of inflation and uncertain geopolitics? Despite these obstacles, 2024 promises to be a much better year for fixed income assets.
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Trends, challenges and opportunities in fixed
income trading
Find out more about fixed income trading trends in 2024
What shook the
bond market last year?
“At the beginning of 2023, the fixed income market was concerned about the possible economic impact of high interest rates and bank failures. Recessionary fears receded in the second half, and fixed income, credit and equity markets all rallied hard”
Unmesh Bhide
Director, Securitized Products Valuation, LSEG
AI, data and cloud:
the technology opportunities
Discover your new home
for fixed income
What does this mean
for fixed income in 2024?
Key contributors
Delivering strategic value
Unmesh Bhide
Director, LSEG
Jayme Fagas
Global Head of Pricing and Valuations, LSEG
Jayme Fagas has been the global head of pricing and valuations at LSEG since 2014 and is a part of the broader Pricing and Reference Services business. Prior to this role, she was global head of evaluated pricing operations at Refinitiv, then Thomson Reuters, in the enterprise content sector. Jayme brings significant expertise to LSEG having worked as a sell-side fixed income trader for more than 20 years at several major Wall Street firms. She also has years of experience in fixed income analytics and evaluations, and has been a pivotal driver in transforming the evaluated pricing market. Jayme has more than 30 years of experience within the global financial industry. As a member of the LSEG Pricing and Reference Service Leadership Team, she focuses on managing LSEG’s evaluated pricing proposition, which is delivered via DataScope Select, the strategic data delivery platform for non-streaming content at LSEG. Jayme is an active industry participant working closely with mutual funds, hedge funds, asset managers, fund administrators and custodians to provide solutions that meet the industry's regulatory and compliance needs.
Andres Gomez
Head of Financial Analytics, LSEG
Andres Gomez has been with Citi for more than 30 years and first joined Salomon Brothers – which, through several mergers became Citigroup – as a member of the international operations department in 1987. In 1996, he joined Yield Book and worked in the analytics support team and was promoted to head of analytics support and consulting in 1999 and, in 2011, was named global head of client services. In 2018, Andres became part of FTSE Russell as part of the Yield Book purchase and was named head of relationship management for the information service division in 2020. He has a Bachelor's degree in business administration (finance) from Hofstra University and an MBA from the Stern Business School at New York University.
In challenging markets, confidence is vital. LSEG’s robust data and analytics provide the insights investors need.
LSEG is a leading global financial markets infrastructure and data provider that brings together powerful data and analytics as a trusted source for in-depth fixed income analytics. This creates new opportunities for fixed income portfolio managers and investors. For example, they can now access the data and analytics they need in a ‘one-stop shop’. And they can engage with the same datasets through the front, middle and back offices – and across different
use cases.
It also means that asset managers and investors can operate with greater confidence in challenging markets, knowing they are working with high-quality, transparent fixed income pricing and reference data, indexes and analytics throughout the enterprise.
Unmesh Bhide joined LSEG as director of securitised products in 2023. Prior to this, he was managing director and founder of PricingDirect at JP Morgan. He was the driving force behind the implementation of transformational initiatives introducing machine learning and other advanced technology capabilities to expand on pricing and liquidity offerings. Prior to joining JP Morgan/Bear Stearns, Unmesh worked at the Merrill Lynch Pricing Service, where he focused on developing pricing models to drive valuations. He earned a BSc in physics from the University of Bombay, an MS in physics from the Indian Institute of Technology, Bombay, and an MS in computer science from the New Jersey Institute of Technology. Unmesh is a member of the Chartered Financial Analyst (CFA) Institute and a CFA charter holder.
Disclaimer
Investors leverage LSEG's fixed income indices for benchmarking, research, and portfolio management. With a long history of providing reliable measurements across developed and emerging markets, LSEG’s fixed income indexes support precision investment strategies and research functions. Curated benchmarks with unique risk characteristics enable more refined investment approaches and
analytical insights.
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Trusted
indexes
Investors can unlock deeper insights and construct profitable investment strategies with LSEG’s Yield Book advanced analytics. The single-source solution, sophisticated modelling and unrivalled flexibility allow investors to refine analytics sets according to their needs. From regulatory alignment to tailored risk management, Yield Book enables confident decision-making, ensuring investments thrive in today's dynamic
market landscape.
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Sophisticated analytics
Sophisticated analytics
High-quality
data
Investors can elevate their fixed income strategy with LSEG’s comprehensive pricing and reference data solutions. With daily evaluated pricing on more than 2.8 million fixed income instruments, and reference data covering upwards of 80 million instruments across all asset classes, LSEG’s valuation services empower investors to make informed decisions and mitigate
risks effectively.
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High-quality data
Discover your new home for fixed income
Cloud-based solutions
The transition to a cloud-based infrastructure enables improved agility and regulatory compliance. Enhance operational efficiency and optimise fixed income processes for evolving market landscapes.
Cloud-based solutions
Enhanced data analytics
Comprehensive data analytics tools unlock deeper insights and refine investment strategies. Access diverse datasets and
real-time analytics capabilities, enabling proactive decision-making in dynamic
market environments.
Enhanced data analytics
AI integration
AI integration empowers investors to navigate market unpredictability and optimise portfolio performance. Seamlessly integrate AI algorithms for risk management and opportunity identification, enhancing operational agility.
AI integration
AI, data and cloud: the technology opportunities
How should investors navigate geopolitical uncertainties and potential triggers for market volatility in 2024?
While the outlook for fixed income is broadly positive, there are plenty of opportunities for volatility to return. The challenges faced last year highlighted the critical need for precise and transparent data in fixed income trading, especially in navigating geopolitical uncertainties. The adoption of data from trusted providers ensures confidence in decision-making processes and supports effective portfolio management and risk mitigation strategies.
How should investors navigate geopolitical uncertainties and potential triggers for market volatility in 2024?
Where can investors find yield opportunities amid shifting interest rates and credit spread dynamics?
The hunt for additional fixed income yield resulted in a rally of credit spreads during the last two months of 2023. Asset managers and investors seek transparency in fixed income pricing data and index methodologies to understand underlying market movements. However, investors will continue to seek yield opportunities but may face constraints in finding attractive returns. This emphasises the importance of accurate real-time data for traders to hedge positions effectively.
Where can investors find yield opportunities amid shifting interest rates and credit spread dynamics?
How will central banks' rate cuts and economic resilience affect fixed income investments in 2024?
Rate cuts are expected in 2024, reflecting a softer stance by central banks amid economic uncertainties. The global economy appears set for a soft landing, bolstering the outlook for fixed income investments. However, the challenges faced last year emphasised the critical need for precise and transparent data in fixed income trading. Investors and asset managers require accurate and trustworthy data, especially during times of high volatility, to make informed decisions. As investors move out of cash and into long-dated securities, there is a growing reliance on accurate data to support trading strategies across various asset classes.
How will central banks' rate cuts and economic resilience affect fixed income investments in 2024?
What does this mean for fixed income in 2024?
Corporate credit performance and tightening spreads
Corporate credit performed well as confidence in corporate earnings and the economic outlook strengthened. Credit spreads tightened, particularly in high-yield sectors, and investors were drawn to potential returns and yield advantages over government bonds. This tightening of credit spreads signalled increased appetite for riskier assets within the fixed income market.
Corporate credit performance and tightening spreads
Shift in investor sentiment and inflows into
fixed income
Investor sentiment shifted as confidence in inflation control grew. Economic indicators suggested a soft landing rather than a recession, boosting faith in fixed income assets. Investors shifted away from cash and poured into longer-term government bonds to secure higher yields. Positive flows were seen throughout the past year, with mutual bond funds and fixed income exchange-traded funds (ETFs) witnessing significant inflows totalling $375 billion, according to Lipper.
Shift in investor sentiment and inflows into fixed income
Bond rally towards the end of the year
In 2023, the bond market defied concerns about inflation and geopolitical tensions, with a remarkable turnaround. Towards the year's end, a significant rally swept through the bond market, driven by optimism about impending rate cuts. Investors expected central banks to ease monetary policies in 2024, causing bond prices to soar. November and December were pivotal, recording the strongest two-month performance in more than three decades.
Bond rally towards the
end of the year
Here’s what shook the bond market last year
The flows into bond ETFs grew by 89% – from $142.1 million in the first six months to
$268.7 million for the whole year. This indicates a nearly doubling of investments in bond ETFs, highlighting a significant rise in investor interest in these instruments during the latter half of 2023.
Growth in bond ETFs
The flows into money-market mutual funds increased by $488.1 million, from
$731.4 million in the first six months, to $1,219.5 million for the entire year. This substantial rise reflects a growing preference among investors for the relative safety and liquidity offered by money-market
mutual funds.
Increase in money market mutual funds
The combined flows into all fixed income funds, including bond and money-market funds (ETFs and mutual funds), reached $1,606 million for the entire year. This total demonstrates the massive scale of investment in fixed income products in 2023, showing a strong overall shift towards these asset classes.
Overall combined flows
Is 2024 the year of the bond?
A strong start to the year has been fuelled by hope that the global economy is heading for a soft landing. Can the momentum be maintained, especially in the face of challenges such as the potential return of inflation and uncertain geopolitics? Despite these obstacles, 2024 promises to be a much better year for fixed income assets.
Download the Fixed income at a turning point:
strategies and outlook for 2024 report
Corporate credit performance
and tightening spreads
Corporate credit performed well as confidence in corporate earnings and the economic outlook strengthened. Credit spreads tightened, particularly in high-yield sectors, and investors were drawn to potential returns and yield advantages over government bonds.
This tightening of credit spreads signalled increased appetite for riskier assets within the fixed income market.
Corporate credit performance and tightening spreads
Shift in investor sentiment
and inflows into fixed income
Shift in investor sentiment and inflows into fixed income
Bond rally towards
the end of the year
In 2023, the bond market defied concerns about inflation and geopolitical tensions, with a remarkable turnaround. Towards the year's end, a significant rally swept through the bond market, driven by optimism about impending rate cuts. Investors expected central banks to ease monetary policies in 2024, causing bond prices to soar. November and December were pivotal, recording the strongest two-month performance in more than three decades.
Bond rally towards the end of the year
Here’s what shook the bond
market last year
Corporate credit performance
and tightening spreads
Corporate credit performed well as confidence in corporate earnings and the economic outlook strengthened. Credit spreads tightened, particularly in high-yield sectors, and investors were drawn to potential returns and yield advantages over government bonds.
This tightening of credit spreads signalled increased appetite for riskier assets within the fixed income market.
Corporate credit performance and tightening spreads
Shift in investor sentiment
and inflows into fixed income
Investor sentiment shifted as confidence in inflation control grew. Economic indicators suggested a soft landing rather than a recession, boosting faith in fixed income assets. Investors shifted away from cash and poured into longer-term government bonds to secure higher yields. Positive flows were seen throughout the past year, with mutual bond funds and fixed income exchange-traded funds (ETFs) witnessing significant inflows totalling
$375 billion, according to Lipper.
Shift in investor sentiment and inflows into fixed income
Bond rally towards
the end of the year
In 2023, the bond market defied concerns about inflation and geopolitical tensions, with a remarkable turnaround. Towards the year's end, a significant rally swept through the bond market, driven by optimism about impending rate cuts. Investors expected central banks to ease monetary policies in 2024, causing bond prices to soar. November and December were pivotal, recording the strongest two-month performance in more than three decades.
Bond rally towards the end of the year
Here’s what shook the bond
market last year
Corporate credit performance
and tightening spreads
Corporate credit performed well as confidence in corporate earnings and the economic outlook strengthened. Credit spreads tightened, particularly in high-yield sectors, and investors were drawn to potential returns and yield advantages over government bonds.
This tightening of credit spreads signalled increased appetite for riskier assets within the fixed income market.
Corporate credit performance and tightening spreads
Shift in investor sentiment
and inflows into fixed income
Investor sentiment shifted as confidence in inflation control grew. Economic indicators suggested a soft landing rather than a recession, boosting faith in fixed income assets. Investors shifted away from cash and poured into longer-term government bonds to secure higher yields. Positive flows were seen throughout the past year, with mutual bond funds and fixed income exchange-traded funds (ETFs) witnessing significant inflows totalling
$375 billion, according to Lipper.
Shift in investor sentiment and inflows into fixed income
Bond rally towards
the end of the year
In 2023, the bond market defied concerns about inflation and geopolitical tensions, with a remarkable turnaround. Towards the year's end, a significant rally swept through the bond market, driven by optimism about impending rate cuts. Investors expected central banks to ease monetary policies in 2024, causing bond prices to soar. November and December were pivotal, recording the strongest two-month performance in more than three decades.
Bond rally towards the end of the year
Here’s what shook the bond
market last year
Investor sentiment shifted as confidence in inflation control grew. Economic indicators suggested a soft landing rather than a recession, boosting faith in fixed income assets. Investors shifted away from cash and poured into longer-term government bonds to secure higher yields. Positive flows were seen throughout the past year, with mutual bond funds and fixed income exchange-traded funds (ETFs) witnessing significant inflows totalling
$375 billion, according to Lipper.
