GAA Fixed Income Track Record
We present the performance of our fixed income asset allocation, including on the slope of the yield curve, which highlights our preferences within the universe of advanced economies. Our portfolio is evaluated against widely recognised benchmarks (detailed below) to provide clients with clear, real-time insight into the effectiveness of our allocation strategies.
Our Fixed Income views are detailed in our monthly Global Asset Allocation report, available exclusively to clients of Oxford Economics.
Within our G10 rates allocation we use 7–10-year USD-hedged total return indices from BAML ICE to calculate performance. By using USD-hedged returns, rather than local currency returns, we ensure that our allocations are actionable for international investors of any base currency.
We evaluate the performance of our overweight allocations vs the comparator US Treasury index (7-10 year)
Fixed Income Curve Views Performance
For our G10 curve allocations, we measure performance by tracking the change in yield spread between the 7–10-year and 1–3-year BAML ICE indices. Curve allocations represent relative value strategies, and their performance is assessed against a zero benchmark, reflecting their market-neutral nature.
Key Fixed Income & Rates Views
- Fixed Income: AI-led productivity growth means a higher neutral rate – As the US economy enters a sweet spot, we upgrade USTs to neutral. Falling unit labour costs and the effects of last year's tariff hikes waning underscore the general disinflationary trend.
- Fixed Income: We still like high-yield credit – We maintain our overweight on high-yield credit, even though we expect spreads to remain range-bound.
- Fixed Income: There's no let up in Japan's reflation trade –We think the BoJ will hike rates twice more this year, and in mid-2027, but this still leaves policy behind the curve.
- Fixed Income: Don't fear the hyperscaler debt rush – We think recent hyperscaler debt issuance will have limited impact on investment grade credit spreads. The AI investment boom has led to a surge in hyperscaler debt issuance, but we think balance sheet risks are well-contained. These companies are highly profitable with little debt, solid fundamentals, and strong earnings momentum.
- Fixed Income: Why private credit doesn’t pose a systemic risk – yet – Rising collateralized loan obligation (CLO) issuance and persistently tight CLO spreads appear at odds with rising default rates, but we don't see signs of a bubble forming in private credit, yet.