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Panopanic 2018. M&G’s economic and bond market outlook

Whilst you can make some strong arguments for the negative returns from 90% of asset classes in 2018 based on the return of populist politics – think of Brexit, Italy’s political instability, AMLO’s election in Mexico and tariffs everywhere – the answer to those negative returns might be simpler: the de facto global discount rate, the 2-year US Treasury bond yield, has risen by almost 100 basis…

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Panoramic Weekly: Fake (trade) news sink markets; bonds rally

Global bond markets rallied over the past five trading days as plunging oil prices, weak US data and disappointment over the real impact of a 90-day trade truce between the US and China led to a sharp flattening of the US yield curve, which is now only 12 basis points from inversion. The flattening intensified after US President Trump toned down his recent comments about the US-China trade agre…

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Can General Electric ease the pain of BBBs?

The positive and negative effects of central bank intervention after the 2007-08 financial crisis have been widely debated and are still – ten years on – not fully understood. For example, keeping borrowing costs artificially low for years has certainly helped spur economic growth (great), but by incentivising companies to take on more debt (not so great). The debt increase also makes me questi…

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Panoramic Weekly: Fed extends Goldilocks contract

If investors enjoyed a dream Goldilocks scenario in 2017 in which growth was hot enough to lift earnings but not too much to warrant sharp rate hikes, many expected 2018 to be more like the year of the bear, marked by a significant rate hiking cycle – until last week. US Fed chair Jerome Powell said the current policy rate is just below the non-accelerating rate of inflation –  a sign that the …

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Panoramic Weekly – Black Friday: Credit goes on sale

November is proving to be even worse than October, especially for Credit markets, amid plunging oil prices, corporate woes, executive scandals and protracted unconvincing economic data, all on top of a global interest rate rising cycle. Corporate bonds, which have been supported by loose monetary policy for over a decade, particularly felt the cold: US Investment Grade (IG) spreads last week po…

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