Abrdn says 2024 should be the year for fixed income
Abrdn has said that “the stage is set for investors to take advantage of higher yields and to ease back into fixed income”.
In an analysis on its website, the asset manager noted a drop in yields in December after dovish comments from US Federal Reserve Chair Jerome Powell.
However, global yields recovered in January, which Abrdn said represents a “prime opportunity” to buy government bonds.
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Looking ahead, Abrdn said that data and market expectations point to lower inflation and a ‘soft landing’ for the economy, so it expects central bank monetary policy to move from ‘highly restrictive’ to ‘neutral’.
“This could (should!) be the year for fixed income,” Abrdn said.
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“If the ‘soft landing’ scenario plays out as we believe, global yields will gently drift lower. Even then, fixed-income investors will still own an asset yielding over four per cent. If the ‘hard landing’ scenario starts to emerge, yields will move dramatically lower as central banks react. Both outcomes offer fixed-income investors capital appreciation.”
Earlier this month, Abrdn said it is seeing robust demand for private credit, with good opportunities in the market for incoming and existing investors.