Monday: First up is the morning traders’ meeting. I manage international bond portfolios, both nominal and inflation-linked, so my attention is always drawn first to overnight developments from Asia.
This time the focus is west not east as our automobile analyst explains his outlook for the sector – with the inevitable focus on large American car manufacturers. The big picture is dire but I am comfortable with my limited exposure here because some bonds are holding up well, unlike auto equities, and continue to provide a good yield.
Tuesday: I meet regularly with our credit analysts – it’s an essential part of my role – and our conversation today is about CMA-CGM, a large French container shipping company. Slowing global trade is affecting transport companies, especially those who ship wares between Europe and Asia like this one, but our analyst’s conversation with the company’s chief financial officer was frank and open.
Running is a big passion and at lunch today I grab 40 minutes for a quick blast through some of London’s royal parks. The fresh air is particularly welcome given the release this afternoon of yet more bleak American consumer confidence data.
Wednesday: A big conversation topic with clients this week has been the expectation of deflation – falling consumer prices. However, it is important to remember prices are rising at about 4.5% in Britain and it is hard to see inflation dipping under 2% before at least the middle of next year.
Moreover, prices of global inflation linked bonds simply do not reflect reality. Some are so cheap that in many markets they are a far more reasonable buy than nominal government bonds of equivalent maturity. Some of the data is unprecedented: the American five-year inflation-linked bond is yielding more than the five-year nominal. And in Japan, as long as consumer prices do not fall by more than 2% over 10 years, then the index-linked bond is a much better buy than the nominal bond.
Input from our quantitative analysis team is crucial here – their models tell me where interest rates and inflation are likely to go – and at the moment they are seeing many anomalies I can exploit through more technical plays such as yield curve positions. Their input also had a positive impact on my International Bond fund, which recently benefited from a steeper yield curve.
Thursday: I catch up with analysts and traders to discuss our asset-backed holdings. Liquidity, or rather the lack of it, dominates conversation so we focus on the quality of the bonds we hold rather than what we might want to buy. Some of my asset-backed holdings are down to about 70 pence in the pound yet they continue to pay a good coupon and few mature within the next four years.
Friday: One focus today is emerging markets debt and I discuss our holdings and the opportunities with our Russian analyst. At a macro level the whole region has deteriorated but we always start looking at credits from the bottom up and some banks, such as VTB and Bank of Moscow have attractive fundamentals.
Saturday/Sunday: I do not run as many marathons as I used to but this one is a real treat. The course is challenging, the weather good and despite a recent cold I’m pleased with my time. The rest of the weekend is spent relaxing with my family in the New Forest.