This week has seen risk-off sentiment back with a vengeance as the Coronavirus outbreak dominates news headlines globally. Thus, investors are flocking to historically safe assets like low beta currencies, government bonds or investment grade corporate bonds with low default risks. However, can Japanese assets like the yen, nominal government bonds (JGBs) and inflation-linked government bonds …Read the article
Emerging market (EM) banks appear to be a defensive asset class – who’d have thought it? It certainly goes against everything we learned in the Great Financial Crisis (GFC). Surely banks are pro-cyclical beasts whose performance surges in times of economic plenty and struggles in more recessionary periods? In the world of Emerging Markets credit, however, things seem different. At least for se…Read the article
We started 2019 with credit at levels we perceived to be pretty cheap. The run since then has been remarkable, with spreads today close to all-time lows. What should one be doing with credit risk at this point?
There are reasons to remain bullish on credit, and fully invested. First, we remain in a goldilocks economic environment for bonds, with low growth and low inflation. These economic …Read the article
With European media outlets focusing on the coronavirus and storm Ciara this week, only little attention was given to the Irish general election held on Saturday. Undeservedly so, I’d argue, considering that the election results mark a seismic shift in Irish politics. The surge of Sinn Féin, winning 24.5% of the first-preference vote, de facto ended the two-party dominance of Fine Gael (20.9%)…Read the article
Lately a growing number of indicators have suggested that the European economy might be out of the woods, heading towards a more robust recovery. For instance, while European inflation remains significantly below the ECB’s inflation target of close to but below 2%, it is worth highlighting that the year-on-year headline rate has in fact doubled from 0.7% in October 2019 to 1.4% in January 2020….Read the article