And they say German elections are boring… As the preliminary results are in, here are our three key takeaways.
(1) Merkel goes fourth
First things first, as expected Angela Merkel has won the election. Her CDU, in combination with its Bavarian sister party CSU, is going to remain the largest faction in parliament (33.0% of votes combined). All roads lead to a fourth term for her as chancellor. … Read the article
The votes are in and it is clear. For the second time in 2016 we have had a major rejection of the political status quo. Following on from the shock UK referendum result, a Trump victory is further evidence that many believe that we have reached peak globalisation and income inequality. The perceived losers of globalisation have turned the incumbent political system on its head, and with it we … Read the article
As James mentioned this morning the European high yield markets’ response to the Trump election victory has been fairly benign. The U.S. high yield market, as one would expect, has been a bit more pronounced, although not as severe as European equities or S&P futures. The U.S. CDX Index, a CDS index of U.S. high yield issuers much like Europe’s Itraxx Crossover, initially dropped nearly two poi… Read the article
After the surprise election result, market reaction within the European high yield market has been surprisingly muted. Here are a few key moves that show how the news is being digested.
In general, the market seems to be pricing in little to no impact for European risk premia, and even for the more potentially directly impacted companies in Latin America, the re-pricing has been very mild.
It … Read the article
Today’s US election result has several implications for emerging markets. At a first glance, the outcome is clearly negative, given the potential downside risks from increased trade protectionism, anti-immigration measures, large fiscal expansion and steepening of the US yield curve and uncertainty in terms of foreign policy.
These risks are already being reflected in asset prices. Since the re… Read the article
As Donald Trump delivers his victory speech, and is set to become America’s 45th President, here’s a quick update on what we’re seeing in bond and currency markets since you went to bed. For bonds, the impact has so far been relatively modest; it’s been equity markets where moves have been stronger (the Nikkei is down 5%). Last night the Mexican peso was the barometer of the likely outcome, a… Read the article