Navigating volatile markets: a rule book for fixed income investors

Franklin Templeton investment experts say “now is a good time to exercise thoughtful diversification”. In this latest paper, they use a framework measuring 20 indicators to assess investment in US Treasuries, US credit, European debt and emerging markets debt.

For US Treasuries, as the yield curve steepens, the experts recommend a cautious approach focusing on the short-to-intermediate part of the curve. Due to volatile inflation, concern around future foreign demand and the rising deficit, they prefer inflation-linked bonds.

Franklin Templeton investment experts also believe it is time to stop thinking about fixed income solely through the prism of the US Treasury market.

Recently widening credit spreads present opportunities for US credit bond investors – and Franklin Templeton is also optimistic on emerging markets debt, which is due to resilience to external shocks and yield advantages. “However, it’s worth noting that this resilience was far from enough to offset equity losses.”

On European debt, however, Franklin Templeton investment experts are neutral due to fiscal uncertainties, with a need for higher yields to attract investment.

Download the white paper, Navigating volatile markets: a rule book for fixed income investors

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