Important information

This website is for Financial Intermediaries in Singapore only.

If you are an Individual Investor click here, if you are an Institutional Investor click here. Should you be looking for information for another location, please click here.

By clicking the “Accept” button, you confirm that you are a Financial Intermediary and acknowledge that you have fully understood and accepted the Legal and Regulatory Information.

Capital IdeasTM

Investment insights from Capital Group

Categories
Fixed Income
What the ‘next normal’ means for fixed income: reimagining core bonds
Keiyo Hanamura
Investment Director
April 10, 2023

After three years of COVID, roller-coaster economies, inflation and central banks’ frantic fight against an uncertain future, it appears we may finally return to the world we used to know. The “new normal” – where rates are low, volatility subdued, and investors are willing to take on more risk – could yet return. But can it be so simple? After all the upheaval, are we really returning to the pre-COVID era?


We could be entering a new regime, where inflation is expected to be higher and central banks may be more reluctant to ease. As a result, fixed income may continue to see the return of yields, even in the safest assets. With a higher level of yields and a more balanced Fed/ healthy economic cycle, the largest bond allocation might finally fulfil its traditional roles, of producing income and offering diversification from equities. This is the “normal” investment director Keiyo Hanamura believes we will eventually arrive at. But, in the short to medium term, we are in the midst of a transition period as we allow rate hikes to work through the system.


Keiyo Hanamura is an investment director at Capital Group. He has 16 years of investment industry experience and has been with Capital Group for six years. Prior to joining Capital, Keiyo worked as a fixed income product strategist at BlackRock. He holds a master's degree in international affairs from the University of California, San Diego and a bachelor's degree in international studies from the University of Iowa. Keiyo is based in Tokyo.

Learn more about
Fixed Income
Inflation
Bonds
Download PDF

Our latest insights

RELATED INSIGHTS

Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.

Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.