Carmignac Portfolio Global Bond

December was marked by a normalisation of the interest rate environment, with German and US long rates rising by 28bp and 40bp respectively.

Investors revised their rate cut projections for 2025 following the US Federal Reserve meeting, which, despite cutting its key rate by -25bp, adopted a hawkish tone.

The European Central Bank also eased its deposit rate by -25bp to 3.0%, while remaining cautious about its future actions.

Activity remains buoyant across the Atlantic in terms of both employment and inflation data, with the core component remaining sticky at 3.3% over the year. Inflation has picked up in the eurozone to +2.3% from +2.0% previously, while core inflation remains anchored at +2.7% year-on-year.

It should be noted that inflationary momentum has also risen in Brazil and Japan, prompting the Brazilian central bank to raise its key rate by one point to 12.25%.

On the currency front, the US dollar continued to strengthen following Trump's victory in the US elections, which weighed on the euro as well as emerging market currencies.

Against a backdrop of generally rising interest rates, the Fund posted a negative performance, albeit outperforming its reference indicator.

In terms of interest rates, our positions in US and UK rates and our exposure to certain emerging market debt, such as that of Brazil, had a negative impact, partially offset by the positive contribution of our short positions in Europe on German and French interest rates.

Our credit exposure made a positive contribution, mainly due to our exposure to financials, Collateralized Loan Obligations (CLOs) and our selection of external debt in emerging countries, particularly Argentina. Against a backdrop of widening credit spreads, our hedges aimed at reducing our exposure to this market made a positive contribution.

Finally, on the currency front, although we benefited from our exposure to the US dollar, the fund was impacted by our positions in the Japanese yen and Brazilian real.

We again expect global growth to remain resilient, with consumption remaining robust, particularly in the services sector, and inflation continuing to fall gradually. Against this backdrop, we expect the ECB, emerging market central banks and, to a lesser extent, the Federal Reserve, to gradually continue their monetary easing. We therefore maintain a relatively high level of interest-rate sensitivity, above 5 at the end of the period.

In terms of interest rates, we favour real rates and a steepening strategy in the United States. We are also focusing on central banks that are lagging the cycle, such as the UK, but also on certain emerging countries, such as Mexico, which also benefits 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 and German debt in Europe, 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 the less accommodative central banks, as the Fed continues its monetary normalisation and China implements stimulus measures, with the Japanese yen, the Brazilian real, the British pound and the Norwegian krone, and a short position in the renminbi.