Jones: 2011 will be the year of idiosyncratic risk

BONDS

All in all, 2010 was a bumpy year for credit markets, starting strong, only later to be overshadowed by the advent of the European debt crisis in May.

At that particular juncture, appetite for risk was thin, and investors flocked to the relative safety of US treasuries, gilts and German bunds. From July onwards, markets were buoyed by the fact the euro was in one piece (for now), as well as the introduction of the EFSF (European Financial Stability Facility). In the medium term, therefore, peripheral sovereign bonds were supported by the core states, and investors believed they could draw a line under the crisis and move on. Credit spreads also tightened on the rounds of quantitative easing from the US. In the UK, a lack of supply...