Excitement is brewing as the World Cup begins today in Russia. Here are the Kames Fixed Income team’s top 5 picks for the tournament.
|World cup ranking (1)
The ultimate tournament team – serial winners and current holders of the cup, they have a knack for peaking at exactly the right time. A blend of youth and experience should see them progress but with the fitness of “sweeper-keeper” Manuel Neuer key. Germany’s credit quality is rock solid but the end of ECB QE will mean some caution is required…
|World cup ranking (2)
The nation has won the most World Cup tournaments, but suffered a humiliating 7-1 defeat by Germany in the last tournament’s semi-finals. The South American side will be out for revenge. Despite positive momentum for the World Cup, the outlook for bonds is not as constructive as the country tackles strikes, a weak currency and upcoming elections.
|World cup ranking (3)
The side is teeming with youthful talent but lacking that much needed experience. Despite this, a successful coach and strong team morale on the back of second place at the Euros in 2016 should see the team do well. Meanwhile, since the election of Emmanuel Macron in 2017, French debt has been very popular and has performed well.
|World cup ranking (4)
Probably Lionel Messi’s last shot at the competition he has never won, but Argentina’s preparation has been chaotic, including a 6-1 loss to Spain in a warm-up friendly. Meanwhile, at home the country is also in chaos and has had to call on the IMF for support. This could work out in bonds’ favour, at least until domestic politics intervenes.
|World cup ranking (5)
A fresh team of quality players (and extremely new coach) have emerged after a disastrous Euros in 2016, however we think the team are a few years early for a World Cup win. For bonds, the market is long Spanish risk and political risk is increasing again. Better quality is available elsewhere in Europe.