The Federal Open Market Committee (FOMC) is expected to outline today when the Fed will begin drawing down its $85bn monthly bond-buying programme. The markets have so far remained stable today ahead of the announcement.
Trindade said US interest rates are unlikely to rise until 2015, given that they are so closely linked with unemployment figures and inflation targets.
Home front
Carney is expected to clear up communication towards investors, and may even link interest rates to data points such as the level of unemployment, in the same way it is in the US.
Yesterday Charlotte Hogg was appointed as the bank’s first chief operating officer, while deputy governor Paul Tucker resigned last Friday fuelling speculation Carney is to organise a widespread reshuffle.
Trindade said it is unlikely QE will be resumed, but more focus will be put on alternative schemes, such as the Funding for Lending scheme, in order to kick start the economy. The current issue, he said, is yields are at historically low levels but there is no transmission to the real economy, to SMEs or to consumers.
He also added that interest rates were unlikely to increase before 2015.
Risk awareness
Trindade manages the Axa Sterling Credit Short Duration Bond Fund and said demand for the fund has increased since the end of Q1, with a notable surge in May.
The £71m fund aims to generate income and preserve capital, and reduce sensitivity to interest rates and volatility. It invests in a diversified range of sterling-denominated corporate assets with maturity of five years or less.
He said he was currently reducing financials exposure and in particular exposure to senior debt which is to be affected by bail in legislation resulting from the Cyprus crisis earlier in the year. Financials accounted for 43% of the portfolio in January, but the figure is now closer to 40% with further reduction likely.
Peripheral Europe exposure has also declined from 14% to 12%, but this is explained by an increase in inflows and the selling of an Italian bank.
Some of the fund’s latest additions include Heineken, Holcim and Anglo-American, a British mining company.
