Sat, Aug 29, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Augustus’ Tim Haywood: Investors in government bonds face difficult year due to increased risks and ending of quantitative easing in UK and US

Thursday, January 14, 2010
Opalesque Industry Updates - Tim Haywood, Investment Director at Augustus Asset Managers Ltd ( a subsidiary of GAM), investment advisor to three of the four Julius Baer Absolute Return Bond Funds (total €4572.96m AUM as at 31.12.2009), commenting on investments in government securities in 2010 said:

“Investors in government bonds face a difficult year due to increased risks and concerns over the ending of quantitative easing (QE) programmes in the UK and US. There is a raft of potential bad news overhanging the government fixed-income markets - be it heightened risk of default, rating downgrades, inflation scares when there is so little yield protection, buyers strikes as well as the end of, or pausing in, QE."

“By example, the Bank of England reverse auction of corporate bonds at the end of last week could signal the start of the unwinding of its other, far larger, holdings of gilts. Banks are being encouraged to lend: if that pressure becomes significant, we have concerns that the Bank will not find sufficient buying demand at low yields if this reverse auction programme extends into gilts."

“In the UK, the range of possible outcomes has rarely been wider. At the pessimistic end, interest rates could be on hold for as long as two years as a new government this year concentrates on fiscal tightening, counterbalanced with an easier-for-longer monetary policy. Interest rates at such historically low levels for such a long period will do little to reduce concerns among investors in long gilts about longer term inflation fears."

“Our investment choices currently favour short dated (up to 2 years) sterling fixed income instruments, be that long call options on intermediate Eurosterling contracts, or short equivalent puts."

"Further afield, we are tactically long short dated US government securities after their swan dive last month and the less-than-stellar employment data just released. We are bearish about Japanese government bonds as the authorities there have a 'rising stock of debt / lack of required growth in tax income' dynamic which is becoming increasingly concerning.”


Augustus AM Ltd is an investment manager of segregated accounts and funds. Its core strengths lie in fixed income and foreign exchange markets. The firm manages c. USD$8.8bn of assets as at 30th June 2009 across three areas: traditional long-only, absolute return and single strategy hedge funds. We currently employ 28 members of staff.


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Hedge funds suddenly find real money is back in Argentina's debt, Elon Musk buys more SolarCity stock following hedge fund manager short, BlackRock plans to get into rental-home financing[more]

    Hedge funds suddenly find real money is back in Argentina's debt From Bloomberg.com: The real money is back in Argentina. Before the country’s default in July 2014 (its second in 13 years), most long-term investors abandoned its bond market. As they rushed out, Argentina became a favorit

  2. Activist News - Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping, Meet Europe's best activist investor[more]

    Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping From Businessinsider.com: Carl Icahn has picked his next target: Freeport-McMoRan. Icahn and a group of other investors have snapped up an 8.46% stake in mining company Freeport-McMoRan, according to a j

  3. North America - Hedge fund manager Ray Dalio’s challenge to the Fed[more]

    From Newyorker.com: For some reason, Janet Yellen, the chair of the Federal Reserve, decided to skip this year’s annual Fed conference in Jackson Hole, where monetary policymakers from the United States and abroad get together with some prominent academics to discuss the big issues of the moment. Th

  4. Performance - Hedge funds set to bank millions by short selling during London share slump, The China market chaos has made this hedge fund its most money in 2 years, Odey hedge fund said to surge 9% betting against China, Hedge funds with long-held bearish views on China rack up profits, Hedge funds in U.S. seen curbing damage from August turbulence, Hedge funds collect on their predictions of a fall, How did managed futures do while the Dow was down 1000[more]

    Hedge funds set to bank millions by short selling during London share slump From TheGuardian.com: Hedge funds are set to bank tens of millions of pounds from the slump in share prices in London, having bet almost £18bn that the FTSE 100 would fall. The funds making the bets include Lansd

  5. Opalesque Exclusive: John C Head IV leaves alternative investment firm Gallery Capital, David Harrison joins as co-CIO[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: John C Head IV, former president and co-founder of Gallery Capital Management, an alternative inv

 

banner