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Emerging Markets: 5 key issues to watch in 2019

Emerging Markets (EM) debt had a torrid 2018 as global macro risks (including general geopolitics and trade wars), softer EM growth and idiosyncratic stories (Argentina, Turkey), all repriced relatively expensive valuations at the beginning of the year. Are the new prices a better reflection of fundamentals? This will largely depend on the evolution of 5 key topics.

  1. China-US – upside surprise…

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Panoramic Weekly: Patient Fed boosts markets

Goldilocks, one of investors’ favourite economic scenarios, seems to have returned in the new year after almost vanishing in 2018: a strong US jobs report and dovish comments from US Federal Reserve (Fed) chair Jerome Powell have reinstated the not-too-hot, not-too-cold environment that combines relatively low rates and good-enough economic growth – supporting risk assets. US High Yield spreads…

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Panoramic Weekly: 2019, fasten your seatbelts?

The new year has started with a blunt reminder of probably everything that investors wanted to forget over the holiday season: economic data is worsening while the oil price continues to fall, dragging down equities and the most equity-like fixed income asset classes. Traditional safe-havens continue to rally, as they did in 2018.

The year left behind ended far worse than it started: after a st…

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Panoramic Weekly: Exhausted, confused after roller-coaster week

Despite big headlines and price swings, most fixed income asset classes ended the five-day period back where they started. This moderate, short-term mean-reversion reflects contradictory views and general confusion over the outcome of the US-China trade negotiations, Europe’s national deficits and Brexit. The world-benchmark 10-year Treasury yield has reflected this mood, dropping to 2.85%, dow…

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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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