High Yield managers need to up their ESG game: 4 recommendations

Not that we needed anybody’s reassurance, but the UK government’s decision that pension fund trustees must consider financially material ESG (Environmental, Social and Governance) factors in their assessments, definitely helps those who believe that sustainability is becoming a need more than a choice – for society and investors alike.

In my view, an ESG lens can help monitor qualitative risks …

Read the article

The Rise of Emerging Market Corporate Bonds

Few investors would have bet on emerging market (“EM”) corporate bonds fifteen years ago. In 2004 the EM external (also known as hard-currency) corporate bond universe was relatively small at approximately US$ 270bn. By 2009 the asset class had more than doubled to US$ 600bn driven by strong economic expansion across developing economies notably the BRIC countries. Since the global financial cr…

Read the article

Bond Vigilantes Weekly: Globalisation-mecca Davos loses shine as trade wanes

When the presidents of the US, France and Britain cancel their trip to the World Economic Forum at Davos – the mecca of globalisation over the past two decades – to face domestic challenges, no wonder investors are worried about falling global trade, inward-looking policies and hence, lower global growth. This week’s data seems to vindicate such fears: US-China trade tensions escalated on specu…

Read the article

The war of the indices: which inflation measure to use?

After a lengthy review, Britain’s House of Lords has finally said that the inflation index presently used to price inflation-linked securities, train fares or student loans should be replaced. Instead, the Consumer Price Index (CPI) should become the new benchmark, as it includes more items and has an overall higher credibility. So far, so good – except if you are an investor.

The statistics b…

Read the article

Panoramic Weekly: The ayes to the left, the noes to the right: the pound has it

Although world markets depend more on Fedspeak and China than on British politics, when the UK House speaker announced (in traditional centuries-old fashion) that the “noes” opposing the government’s Brexit plan had won – inadvertently, he helped reduce sugar levels in Europe. Investors’ interpretation that a hard or disorderly departure from the EU is now less likely strengthened the pound and…

Read the article

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…

Read the article

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…

Read the article

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…

Read the article

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…

Read the article