Regional Fixed Income Strategy
We believe that the majority of recent gains in fixed income markets in the Middle East and North Africa (MENA) region are now behind us, and we reaffirm our neutral-bearish outlook on debt markets in the region over the medium term. Our view is broadly in line with BMI's global research team belief that risks lie to the downside for global fixed income over the coming quarters. Such a view is underpinned by our belief that the US 10-Year Treasury yield bottomed out in September 2012. Although US 10-year Treasury yields are standing lower at the time of writing compared to end-2013, we believe that the combination of stronger economic data, and the signalling value of tapering from the Fed, will send US yields above the 3.00% level in the coming months.
That said, a combination of favourable macroeconomic and political developments will ensure that yields will remain low or decline further in some debt markets in MENA. We view Dubai as the GCC's bright spot, while yields of Jordan, Egypt and Moroccan bonds will also remain low over the coming quarters.
GCC: Dubai Over Abu Dhabi, Qatar Over Bahrain
|Heading Towards 3.00%|
|US - 10-Year Treasury Bond Yield, %|