Some curves are flattening whilst others are steepening 60 90 40 - - PowerPoint PPT Presentation

10 20 30 40 50 60 70 80 90 2s 10s spread

Some curves are flattening whilst others are steepening

Source: M&G, Bloomberg, 6 December 2018 5 10 15 20 25 30 35 40 10s 30s spread

• 10

10 20 30 40 50 60 2s 5s spread

B O N D V I G I L A N T E S

Source: Bloomberg, 7 December 2018

US economic forecasts: telling a different picture

B O N D V I G I L A N T E S

US ECONOMIC FORECASTS (YoY %) 2017 2018 2019 2020 Real GDP 2.2 2.9 2.6 1.9 Consumer Spending 2.5 2.7 2.7 2.1 Government Spending

• 0.1

1.7 2.3 1.2 Private Investment 4.8 5.6 4.2 3.1 Exports 3 4.3 2.7 2.8 Imports 4.6 4.6 3.9 3.2 Industrial Production 1.6 3.7 2.7 2.1

0.5 1 1.5 2 2.5 3 Fed Funds Rate US 3m Libor Overnight Index Swaps

Fear Index

Source: M&G, Bloomberg, 6 December 2018

Liquidity in favour of term risk as fear index picks up

B O N D V I G I L A N T E S

0.1 0.2 0.3 0.4 0.5 0.6 0.7

The fear index is on the rise once again as volatility increases

Source: M&G, Bloomberg, 6 December 2018

B O N D V I G I L A N T E S