War in Europe

Weekly Comment | Fixed Income

Heightened vol as a result of the shocking Russian invasion of Ukraine; govt bonds yields pulled back given flight to haven assets; inflation expectation jumped; central banks stuck in a challenging position of surging inflation pressure from energy disruption and homeland security dampening growth aspects.

CDS indices saw sharp intra-day vol as the geopolitical situation evolves rapidly; cash bond capital structure risks underperformed and issuers with sizable Russian exposure experienced pronounced selling.

Topline portfolio risk level close to all-time low with decent cash buffer and front-end curve positioning.

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