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BVTV: Oil dips, Argentina and the EU-summit

Oil has entered a bear market, despite OPEC’s ongoing supply reduction of 1.8m barrels/day, which started in January 2017 and is set to continue until March 2018. How are fixed income markets reacting? Also, Argentina has been in the news twice this week: successfully tapping the market for the $2.75bn sale of a 2117 bond, but failing to make MSCI’s upgrade from frontier to emerging markets. Ho…

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Argentina’s century bond: much ado about nothing

Argentina’s recently issued century bond deal was unexpected in terms of timing and maturity. Century bonds in Emerging Markets (EM) are rare (we think the table below is pretty exhaustive) and they grab the headlines, especially when issued by a credit that has defaulted many (many) times, like Argentina.

Are century bonds that much risker?

  1. Duration: As we wrote previously, the duration of …

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The euro and the dollar: rates not driving performance. So what is?

Despite US rate hikes in December, March and another last week, the US dollar has depreciated back to pre-election levels.  All of the Trumpflation dollar premium has disappeared.  As the Trump dollar trade appears to have run out of steam, the Euro has however been climbing. Optimism around the Euro area growth comeback grew leading up to the ECB meeting earlier this month, with EUR/USD hittin…

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BVTV: Will the Fed spoil the EM party?

A hiking Fed has caused trouble for Emerging Markets in the past; will history repeat itself? Also, we touch on two things from the Fed meeting that are more interesting than the actual hike itself.

Tune in for the latest edition of BVTV, where Fund Manager Claudia Calich joined me to discuss how she has positioned her EM debt portfolios for the second half of the year.

 

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Eight quick bullet points on the Banco Popular resolution

1. The ECB can act quickly when considering if a bank has reached the point of non-viability (PONV), and enacting a resolution plan.  The speed with which regulators acted clearly took the market by surprise.  At the same time, how the regulator determines a bank to be non-viable is still a grey area (considering the situation around some of the weaker Italian banks).

2. EU stress tests are not…

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BVTV: The only certainty is more uncertainty

While last week ended with British prime minister Theresa May promising to provide ‘certainty’ after yet another shock election result, for markets, the opposite looks likely to be true. And with the renewed uncertainty of a hung parliament likely to prove unhelpful in upcoming Brexit negotiations, what implications can markets draw for UK growth prospects and the likely direction of gilts? Tun…

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UK election throws up new uncertainties for markets

The UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority.  It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party.  The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government.  The Pr…

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State-owned corporate bonds: there is no such thing as an implicit guarantee

A couple of weeks ago, state-owned International Bank of Azerbaijan (IBA) shocked its bondholders by announcing a surprise restructuring. The bank’s capital ratio turned negative at year-end 2016 due to large currency losses as a result of the depreciation of local-currency Manat (AZN). The International Bank of Azerbaijan bonds (IBAZAZ) 5.625% 2019 bonds were trading above par and dropped by 1…

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Premier League footballers are making currency calls, like rappers and models in 2007. Are they right to avoid GBP?

According to recent reports, leading foreign football players in the English Premier League are looking to get paid in euro rather than sterling. Since the UK referendum result in June last year, sterling has fallen by 12% against the euro, so it is unsurprising to see that some players have questioned the denomination of their salaries. It is not the first time that global stars have asked to …

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