Carmignac Portfolio Global Bond

The main news at the start of the year was the inauguration of Donald Trump, which led to the signing of a number of decrees, including the probable implementation of tariffs in the future.

At its meeting, the Federal Reserve opted for a pause in its rate-cutting cycle, despite weaker-than-expected GDP growth in Q4 2024 (+2.3%), but taking into account a vigorous level of activity, such as employment data and consumer spending.

The European Central Bank cut its key rate by 25bp to 2.75%, even though growth in the region stagnated in Q4 2024.

Conversely, the Japanese central bank opted to raise its key rate by 25bp, given the resilience of inflation in the archipelago.

Over the month, we saw an acceleration in eurozone rates on the back of better-oriented leading indicators, in contrast to US rates, which fell as economic surprises eased.

On the currency front, the US dollar paused in January in its rally that began on the eve of Trump's election. A less vindictive application of tariffs, very long market positioning and better-than-expected eurozone PMIs gave the euro and the currencies of emerging countries some breathing space.

The fund delivered a positive absolute and relative performance against its reference indicator, benefiting from its main performance drivers.

On the rates side, our US and European steepening curve and inflation strategies, as well as our short positions on Japanese rates, made a positive contribution. In addition, our exposure to certain emerging market debt, such as that of Mexico and certain Eastern European countries, had a positive impact.

Our credit exposure made a positive contribution, mainly due to our exposure to financials, the energy sector and our selection of emerging market external debt, slightly offset by our credit hedges aimed at reducing our exposure to this market.

Finally, on the currency front, we benefited from our exposure to Latin American currencies such as the Brazilian real and Mexican peso, as well as our long positions in the Japanese yen and Hungarian forint. Conversely, the portfolio was impacted by its exposure to the US dollar and the Chinese yuan.

Against a backdrop of resilient global growth and steadily falling inflation, we expect the main central banks in both developed and emerging countries to gradually continue their monetary easing. We are therefore maintaining a relatively high level of modified duration.

In terms of interest rates, we favour real rates in the United States and Europe. We are also focusing on central banks that are lagging the cycle, such as the UK, but also on certain emerging countries, such as Brazil, which is also benefiting from high real rates and an allocation to certain Eastern European countries. We also have short positions on Japanese yields, where inflation is starting to take root, and on French debt, against the backdrop of a political crisis and a large supply of issues at the start of the year.

On credit, we are maintaining our positive bias, albeit cautiously, given the high valuations, and are maintaining a substantial level of hedging on Itraxx Xover to protect the portfolio from the risk of widening spreads.

On the external emerging debt front, our selection remains diversified and we continue to favour special situations in countries whose economies are restructuring or showing significant improvement.

Finally, with regard to currencies, we now have moderate exposure to the US dollar, following the strong rally triggered by Trump's election, and we retain limited exposure to emerging country currencies. However, we are diversifying our exposure to the currencies of central banks displaying a less accommodative tone, as the Fed continues its monetary normalisation and China implements stimulus measures, with the Japanese yen, a selection of Latin American currencies (BRL, MXN, CLP), the Hungarian forint, and a short position on the Chinese yuan.