Fixed Income Sales - Challenges for 2011
hi all,
since the markets are bullish for 2011 I am wondering what the biggest challenges for a fixed income sales man are in 2011. Investors probably might go into equities and disregard European government bonds...
what are your opinions?
This statement is inaccurate. In FI and investing in general, you need to start thinking in terms of "risk-on" and "risk-off" trading.
Risk-on : Investors are willing to be aggressive and chase returns by taking on risk as their outlook is positive Risk-off: investors are defensive and trying to preserve their money by cutting down risk as much as possible
Long equities as an asset class is a big risk-on trade. If Euro sov risks flare up, equities across the world will face big headwinds. Just look at the performance of U.S. equities when the Greek crisis hit in early-mid 2010.
Start with a thesis and then build up an asset class picture. If you think Euro sov will face another round of funding issues, treasuries will do well, carry will falter, commodities will falter, equities will falter.
I am in the risk on camp. Personally I think spreads will continue to tighten in areas outside of the Eurozone (emerging markets). However, if Spain or a larger blows up look out euro. I with everyone else, will look to risk off/dollar positions.
More importantly a good place to find FI ideas/discussions are from PIMCO. Below is a link to their insights page. Gross and El-Erain are great but the rest of the commentary is top notch as well.
http://www.pimco.com/Pages/InsightsOverview.aspx
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