On April 2, during its long-awaited "release day", the Trump administration announced higher-than-expected reciprocal tariffs. The response from the markets, particularly equities, was swift, with Europe erasing the gains it had made since the start of the year in just 2 sessions, sending the VIX over 50. The classic risk-off movement took place in Europe, with yields falling sharply (the German 5-year was down 35 bps), offsetting the widening of credit spreads (Credit euro IG + 12). The most worrying reaction was on the other side of the Atlantic, where a fear of US Treasuries took hold and saw the US 10-year jump 49 bps between April 4 and April 11, after a ten-basis-point decline following Liberation Day. Despite this sharp rise in yields, the dollar weakened, raising fears of massive capital outflows from the US. The violent movement in yields certainly made the President think about the consequences of his statements, and a 90-day truce was announced a week later, triggering a major market rebound. Despite this rebound, spreads widened across all segments: +16bp for euro investment grade, +12bp for US investment grade, +34bp for European and US high yield. Performance was nevertheless positive in Europe, thanks to interest-rate movements: +0.9% for euro investment grade, which returned to its highest level of the year, and +0.4% for euro high yield. US credit underperformed, with a slightly negative performance on investment grade and a marginally positive one on high yield
Over the month of April, the fund generated a positive performance of 0.64%, underperforming its benchmark (-35 bp), mainly due to the fund's underexposure to European rates, our exposure to the US market (7% of the portfolio) and a higher dts. Indeed, the most cyclical sectors and the subordinated portion logically underperformed in this risk-off market. On a more positive note, our exposure to the UK market (14% of the portfolio) proved particularly resilient.
In terms of issuers, convertibles were in the spotlight, with Leg immobilier, Tag immobilien and Vinci as top performers, while our exposure to the dollar and especially banks (Standard chartered, JP Morgan, Barclays) was logically penalized by fears of recession.
In terms of noteworthy movements, we reduced our duration by selling German short rates (schatz) in mid-April, believing that the market was expecting too many rate cuts from the ECB. In fact, according to our macroeconomic scenario, in which most countries reach an agreement on customs barriers by June, growth should slow but remain positive in Europe and the United States. Against this backdrop, the credit market remains an attractive and volatile carrying asset.
On the primary side, despite the results period and the "very bad Trump" storm, we were active on Heineken, Nippon life (in USD), BNP, Aeroporti di Roma, LVMH, Ausnet, Achmea Bank, TDC, Carrefour...
We have taken advantage of certain names such as transurban or Daimler Truck for reasons of valuation.