CIO View: Bonds

UBS maintains an Attractive rating on most high-quality bond segments, arguing that recent market sell-offs driven by Middle East tensions have created overdone rate-hike expectations.

Key Takeaways

• 1.Maintain Attractive recommendations on high grade, investment grade, and emerging market bonds, while High yield remains Neutral.
• 2.Market expectations for central bank rate hikes have likely moved 'too far too fast' in response to Middle East energy supply disruptions.
• 3.The closure of the Strait of Hormuz is creating upside inflation risks, but downside growth risks and loosening labor markets (particularly in the US) may limit central banks' ability to deliver on hawkish expectations.

Table of Contents

• Bonds
• Global Asset Class Preference
• High grade bonds
• Investment grade bonds
• High yield bonds
• Emerging market (EM) bonds
• Global asset class preferences definitions
• Appendix

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