From BT’s excellent Vimal Gor today:
March was a volatile month during which the market’s obsession with ‘Trump-onomics’ continued to dominate. The start of the month was characterised by bonds selling off as the ‘Trump-flation’ trade was further fuelled by the Fed guiding yields higher into the March rate decision. However, after all the hawkish rhetoric, the Fed delivered a “dovish hike” and bonds rallied back. Treasury yields continued their descent towards the end of the month after the GOP’s failure to repeal the Obamacare, which brought into question Trump’s ability to execute on a number of other key manifesto items. After having slated the Act for eight years, the GOP had no cohesive and palatable solution ready and was therefore unable to honour Trump’s promise to repeal and replace the Act immediately. Ultimately, the inability to gather sufficient votes came down to the ‘Freedom Caucus’ (formerly known as the Tea Party) and their unwillingness to support the bill.
We started the month strongly but gave back performance as yields rallied back and credit continued to tighten. Over the month we moved from a short to a modest tactical long duration position as the weak data flow and lack of political progress pressured bond yields lower. This month our key flagship portfolios performed in line with their respective indices.
