The Financial Times today ran a story that the ONS has admitted errors in its measurement of the telecoms sector. It seems that the ONS has effectively been focussed on output of the telecom sector as based on turnover of the providers, and making a price assumption of the goods and services they sell. On this methodology, the ONS shows prices of telecoms were flat between 2010 and 2015, and tu…Read the article
After such a good run for credit spreads in 2017, and a more challenging start to the New Year for government bonds in particular, are we right to be more cautious about prospects for markets in 2018? Fund manager Wolfgang Bauer joins me to discuss what’s behind the recent sell-off in bunds and Treasuries, and what we can read into primary market activity so far in January.
Plus, will the ECB…Watch the video
Credit risk is real. It’s easy to forget this platitude in times when both investment grade and high yield credit markets go from strength to strength. Even one of Europe’s foremost credit investors – the European Central Bank (ECB) – has recently been reminded that there is indeed the risk of permanent loss of capital when buying corporate bonds.
Every week the ECB updates the consolidated lis…Read the article
Good performance after an exceptional 2016
2017 was another good year for high yield investors with the global high yield index delivering a total return of 8.0% (in USD terms), albeit this was less exciting than the 16% achieved in 2016. The US continued to outperform Europe but at a far more modest rate compared to 2016, with a 7.5% local currency total return vs Europe’s 6.7%, although much …Read the article
On 22nd December last year, President Trump enacted probably the most significant achievement to date of his presidency by signing the Tax Cuts & Jobs Act of 2017. The precise implications of tax law changes can be fiendishly complicated and difficult to assess due to the numbing complexity of the legislation and individual companies’ tax planning arrangements. However, in broad strokes, I be…Read the article
Emerging markets debt posted strong returns in 2017, driven by the stabilisation of fundamentals, ongoing global and EM economic recovery, a small rebound in commodity prices and a geopolitical environment in which the usual suspects (Trump, North Korea, China) have behaved in a more benign fashion thus far. One had to struggle to find an asset that produced negative returns and the only two th…Read the article
Happy New Year to you all. Thank you for another bumper crop of entries for our Christmas quiz. This year’s winner and new reigning champion is Adam Begg of UBS Investment Bank. Many congratulations. As you know, this year we donated £500 to Cancer Research UK in lieu of a trophy. Via CASCAID, the fund management community in the UK this year decided to try to raise £1 million for Cancer R…Read the article
Let’s be honest, 2017 won’t go down in history as the most exciting year for investment grade (IG) credit markets. IG credit spreads have moved more or less in one direction only: lower and lower. Still, there are valuable lessons to be learnt. Here are our key takeaways.
Positive mood swing in Europe drove EUR IG outperformance vs USD IG.
Back in early 2017 the logic was as follows: After the…Read the article
Towards the end of this year, a December spike in the cross currency basis for major currencies against the dollar grabbed the market’s attention. But what is cross currency basis (“the basis”)?
Consider a European company taking a one year loan from its domestic local bank to fund its US operations abroad. In order to hedge the currency risk, the company enters into a one year EUR/USD currenc…Read the article
Short term US dollar interest rates continue their march higher. 3-Month USD LIBOR recently hit 1.61%, fuelled by the Fed’s 25 basis point hike on December 13th, a level last seen in late 2008. With further rate hikes on the horizon in the US and a potentially more hawkish European Central Bank, is 2018 the year when floating rate high yield meaningfully outperforms its fixed rate cousin?
The s…Read the article