Jinda Asset Management issued a statement, saying that the current market bond yield is likely to be at or near a cycle high. If inflation remains mild, the valuation of US and European bonds is comparable to other asset classes for the first time since the 2008/2009 global financial crisis. Jinda Asset Management believes that barring any unforeseen circumstances, the Fed may maintain official interest rates unchanged until inflation is truly under control, but the possibility of a rebound in the US bond market this year has increased. However, even though developing market bonds are showing tactical investment opportunities, the inflation and interest rate mechanism post the "global financial crisis" may not necessarily be repeated. In Europe, inflation has significantly declined and interest rates have peaked. The local economy has clearly weakened, and the European Central Bank had previously been actively raising interest rates, resulting in a balance sheet size much larger than the Fed. However, the recent rise in US bond yields has spread to Europe. Even though the European Central Bank maintains a tight monetary policy, the ongoing economic risks and increased attractiveness of defensive bonds have increased. Falling inflation is good for emerging market bonds Jinda Asset Management points out that due to positive fundamental factors, falling inflation, and relatively high real interest rates, emerging market bonds for the year 2023 are performing relatively steadily in the face of a persistent bear market period and a strong US dollar. Emerging markets have been experiencing net capital inflows since 2020, as other countries need to ensure supply chain security, commodity-producing countries in emerging markets are benefiting particularly well with better fundamental factors. Intra-regional trade growth is also expanding local sources of demand, lowering their sensitivity to developed markets. Falling inflation allows several emerging economies to cut interest rates, providing investment opportunities for the future. The shift in US interest rates is expected to boost this momentum and reduce the risk of emerging market currencies in a loose monetary cycle. Given that countries like Brazil and Colombia in Latin America still have relatively high real interest rates and positive inflation dynamics, along with stable external balances, they are particularly favorable. Carefully select credit Jinda Asset Management states that credit spreads have been at near historic lows in recent years but have surged significantly in 2023, providing opportunities for discerning investors. Investment potential in specific areas such as bank subordinated bonds, structured credit, and other specific areas is attractive, and compared to traditional high-yield bonds and investment-grade corporate bonds, they offer better credit risk compensation. In general, rising default rates and financing costs will test borrowers with weaker financial strength, so investors must choose carefully. Although the valuation of investment-grade bonds (adjusted for liquidity) of emerging market companies is not particularly lower than investment-grade bonds of developed markets, from the perspective of credit rating trajectories and lower leverage, their "bottom-up" credit quality remains strong. Spreads of bonds below the "single A" category are higher, more susceptible to overall risk, and investors with the ability to withstand a broader range of risks can take advantage of potential mispricing. Compared to other asset classes, credit offers competitive potential for mid-term absolute returns and risk-adjusted returns, but a weak economic environment and adjustments in funding costs may increase default rates, widening spreads in 2024, especially in the high-yield bond market. Therefore, an investment strategy focused on short-duration and high yield should be considered, with the potential to extend credit duration if spreads widen significantly or if cyclical conditions improve.