Pierre Chartres, fixed income investment director at M&G Investments, discusses US inflation, the bond market and where he’s finding opportunity. He speaks on Bloomberg Television.
Here, i know you’re a bonds guy, but can you maybe, just maybe tell us what the when i see it, inflation print so hot in the us. yeah, good morning, so indeed, the inflation print from from last night in the us did show that inflation was quite hot. and more for core is is definitely very i do think that it wasn’t all doom and explains some of the rally that we see.
I mean, if you look a little bit under the hood, it showed that potentially inflation, inflation is stabilizing at a high level, but stabilizing nonetheless, becoming an anchored. i also think the consumer, the core goods numbers are flat month and months were actually reassuring that this services inflation is actually happening the breakout number was shelter inflation.
But we know that there’s always a bit of a lag in the way that the let’s so in a way, it kind of reflects changes in housing prices, in rent prices from 6 or 12 months ago. report. if you look at this, how will the fed more grist for the mill for them, isn’t it? i mean, this is this is not what the fed is looking for in terms of being able to pivot to a more dovish monetary
Policy. indicated indication that inflation is moving down. i do think it probably means that rates and and that the fed reserve, again, is going to have to do jumbo rate hikes in november and in december. interesting, when interest rates are at four and a half, five percent and maybe inflation is still relatively sticky, hopefully they won’t continue to blindly would
Really increase the chances of a for everything and everyone in this inflation print. about, you know, how important the macro is in determining investment decisions now. think the shorts, they’re just going to keep establishing your positions at i think ultimately that that over the long term, over the medium term, i do labor data, economic data in the us is going to be
Of the utmost of the utmost importance over this over the next six income, my asset class, i think there are reasons to be more constructive stay higher for longer. i think a lot of the adjustment has you know, when you have a look at these bond markets are big corporate or are you looking perhaps at some of those investment grade corporate bonds which have probably fallen
Back into the high where do you find quality and high yield with that point, investment grade corporate bonds or maybe triple b rated corporate bonds or even higher quality high yield corporate bonds are now potentially severe recession than us, those types of companies that make up these these indices have tended tended to be very resilient, even even in past limited. and
Again, just because of the carry or inflation or if maybe growth falls down a little bit quicker than anticipated in the us, you could see yields come down that asset class asset. what are your contrarian views? thinking behind that and why anyone would want to touch uk assets just given substantially. in your case, assets ever since that the mini budget announcement on
The twenty third of september. to be honest, the sell off has been has been quite severe. and we actually think that again, in the more resilient, high quality uk international exposures, banks as well, financials we think are well capitalised and relatively robust. so there could be opportunities in the uk bond markets. again, given the sharp correction that we’ve seen
Over the last two weeks, i want to get a sense of what you made, of what the underbelly has been doing at this buying program friday. i eat today, later today. and do you think he did the right thing? i think the bank of england needs a will has the it is obligated to stick to their their stance, which is this is an emergency intervention. we are not financing the budget
Deficit were significant threats to financial stability and that’s their position. and of course, hopefully they don’t want to intervene again next week or uk gilt yields on their own. and that’s their positioning and that’s increase again and are a threat further and threat threats and further financial stability in the uk, the bank of england point in the future.
Transcribed from video
Investment Grade Corporate Bonds Look Interesting: Chartres By Bloomberg Markets and Finance