Tag Archives:

US

16.04.29-MR-blog-1

How severe is the current energy sector default cycle?

To date the defaults we’ve seen in the US high yield market have largely occurred in the energy/commodity sectors. To see whether this trend is likely to persist I spent some time comparing the current default cycle with that of the US telco sector in the early 2000’s (see also James’ recent blog for the parallels between today’s high yield market and that of 2001).

The telco bust occurred slig…

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Does the Overton Window apply to monetary policy? And four other things.

A few things that I’ve found interesting over the past week or so:

  1. I’m just back from a week’s holiday in France, and my news source whilst I was away was the hotel’s International New York Times. Terrible for English Championship football rumours, but lots about US politics and in particular the recent discussion about the Overton Window.  Joseph Overton’s theory is that there is a limited ra…

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16-03-11-CC-blog

The Central American Remittance Crunch – who would lose most from a Trump Presidency?

The US election campaign has surprised everyone thus far. Candidate Donald Trump has vowed to deport all of the 11 million illegal immigrants currently living in the US. He has also declared that he would impound all remittance payments derived from illegal wages. We have written before how Central America and the Caribbean would benefit from improving US growth and have been invested in variou…

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WTI Crude Oil futures curve

Damsels in distress – Chesapeake and distressed exchanges

2009 through 2013 were some very good years for the US high yield market. And the energy subset was no exception. Returning  51%, 13%, 9%, 12% & 6% in each of those years, it’s not surprising that the BofA Merrill Lynch US High Yield Energy Index practically trebled in size. Voracious issuance, much of it to fund shale oil development, was met with equally intense buy-side demand and with it ca…

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2015-11 blog AR 1

Is there still slack in the US labour market?

We have often blogged about the current tightness in the US labour market; in particular the initial jobless claims number as a percentage of the working age population being at all-time lows.  The Fed too has recently produced indicators to tell a similar tale; looking at unconventional unemployment proxies – such as the insured unemployment rate in this recent post – suggests that labour mark…

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Chicago research trip video: Tight labour markets and crisis-like corporate bond valuations

It has been a while since we last uploaded a video from one of our U.S. research trips. The question we asked in March as to whether the Fed would hike interest rates this year or not has still not been conclusively answered. Although a 2015 hike is not completely off the table, as we are entering the final two months of the year it seems a lot less likely than it did back then. Nonetheless, fr…

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15.10.28 blog RW1

The real data – the Phillips curve is alive and well

One of the first rules of economics is that the equilibrium market price is generated by relative supply and demand. Limited supply or excess demand should result in an increase in price. One of the questions that has arisen in the post financial crisis world is why have wages not increased despite unemployment heading towards historically low levels? Given the improvement in data such as headl…

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EUR IG non-financial bond issuance in 2015

The Yanks are coming: US firms are rushing to the EUR corporate bond market

Reverse Yankees, i.e., bonds issued by US entities in currencies other than USD, have become an integral part of the global investment grade (IG) corporate bond universe, particularly in the European IG space. For treasurers of US companies the issuance of EUR-denominated Reverse Yankees offers several advantages:

  1. In case a US firm reporting its results in USD has operations within the Eurozon…

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The inherent monetary policy lag

Timing the Fed Rate Hike

The graph below shows US unemployment alongside the Fed rate over a period of 45 years. From this you can observe the broad relationship between the two, specifically the time delays between Fed rate hikes and the upturn in employment which has historically followed. This time the Fed have delayed the rate hike for a number of reasons, but if history is anything to go by, we can perhaps use thi…

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Slide1

The falling US unemployment rate could benefit some emerging markets

The declining unemployment rate in the US has renewed the debate on the timing and pace of monetary tightening by the Fed. While wage pressures have been muted thus far, the risk is rising that further declines of unemployment will lower the rate below non-inflationary (NAIRU) levels and prompt the Fed to start hiking.

For emerging markets, one of the main transmission mechanisms is through wea…

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