What does the war mean for your investments today?
Francine Lacqua
Siliki Pachata
Pay attention to cash - it can be source of return and way to sidestep duration risk. Second area is credit.
Volatility on front end of rate curve weakening hedging properties of short-term rates.
Siliki Pachata
Inflation expectations haven't fed through yet into market on longer term horizon. Linkers could be good diversifier.
We haven't seen demand for linkers since 2022. No premium priced in for medium/long-term inflation.
Siliki Pachata
Gilts in tough spot. Two-year gilts had most volatile period since 2022 gilt crisis. More cautious on gilts.
Prior to war, gilts were attractive with BOE expected to cut rates.
Siliki Pachata
ECB has more room to take action relative to Bank of England, but staying put for next meeting.
Not going back to 2020-22 scenario on monetary or fiscal side.