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2020 Vision: Bond Market Outlook

Let me start with two predictions. Firstly that the title “2020 Vision” will be irresistible to all year-ahead outlooks, no matter what publication or industry you work in. This is why I trademarked the idea many months ago, and now expect to retire on the proceeds of all the copyright breaches. My second prediction is that in my industry, bond fortune telling, virtually all of those 2020 outl…

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Is the ECB pricing investors out of the primary market?

Christmas has come early for Europe, with Mario Draghi’s goodbye present to the market of further quantitative easing (“QE”). The ECB has kicked off its latest round of asset purchases. While this will undoubtedly be supportive for European credit, I feel much of the impact is already priced in to the secondary market. With a large book to fill, a significant part of the ECB’s ammunition is…

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Six scary charts to spook investors this Halloween

Financial markets can be a scary place for investors. The US economy is now in its longest expansion on record, the world is seeing record level of total debt and now even some corporate bonds have negative yields.

If you’ve carved a pumpkin, got your Halloween costume and been to see the latest scary movie, there’s only one thing left to do: take a look at the Bond Vigilantes team’s 2019…

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It wasn’t perfect, but it was the best we had

No doubt the main thing that Mario Draghi will be remembered for is his famous “whatever it takes”. He told financial markets that the Eurozone was not about to collapse and made it clear that the ECB would save the banks and peripheral sovereign nations of Europe.

More interestingly, however, is to think about how Draghi found himself in the position to be able to QE and to undertake othe…

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Defaults in European Retailers and US Energy on the rise

2019 has been a pleasant ride so far for high yield investors. Over the past 9 months the global high yield market has delivered a total return of 10.9% and an excess return of 6.4%, in part thanks to the U-turn of major central banks. Despite all the good news, things have occasionally gone wrong.

Recent events have reminded high yield investors that investing doesn’t come without risk. Thomas…

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Ukrainian bonds have delivered one of the highest returns in EM this year

Can Ukraine continue outperforming?

Ukrainian fixed income assets have performed better than
expected this year, and delivered one of the highest returns in the emerging
market universe. Since the beginning of 2019, Ukraine’s five-year USD bond
spread has tightened by about 370bp, while the JP Morgan EMBI saw spread
compression of just 70bp year to date. Political novice Volodymyr Zelenskiy and
his Servant of the People (SP) par…

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After FTSE Russell index delay, what’s next for Chinese government bonds?

Yesterday evening, FTSE Russell announced that
China Government Bonds (CGBs) would not be added to the widely followed FTSE
World Government Bond Index, but remain on the watch list for inclusion until
further review. This came as a surprise for most investors: Bloomberg Barclays
and JP Morgan both recently added CGBs and bank policy bonds to their index
suites. In challenging times for the Ch…

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The ECB resumes corporate bond purchases — here is what you have to know

All eyes are on central banks these days as major
monetary policy decisions have been driving global bond markets. The eagerly
awaited September meeting of the Governing Council of the European Central Bank
(ECB) has given bond investors much food for thought. In particular, the new
round of its asset purchase programme (APP)—announced in true ECB fashion revealing
only the bare minimum of det…

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Will the Bank of England join the loose money bandwagon?

As the year of the 325th anniversary of the Bank of England’s foundation, and as the month of one of the Bank’s more important rate-setting decisions since 2008, September provides a congruous occasion on which to reflect on the history of the BoE and consider what the future holds for it. Founded in 1694 as a private bank to the government, it was in 1998 that the BoE was granted independence…

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