Author profile

Wolfgang Bauer

Years in the bond markets: 7

Specialist subjects: Investment grade credit (and the mysteries of microfluidics…)

Likes: Football, scuba diving and jiangsu cuisine

Heroes: Alfred Wegener, Charles Darwin and Stanislav Petrov

ECB to the rescue: Whatever it takes 2.0 ahead?

It’s been a rough two weeks in bond markets, to say the very least. Risk-off sentiment is reigning supreme. In Europe, looking at my screens this morning, iTraxx Xover—a bellwether of European high yield credit risk—jumped to its widest level since mid-2013, while the yield on 10yr German Bunds dropped to an all-time low below -0.8%.

In previous times of market turmoil, the European Cen…

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Craics begin to show in Ireland’s political establishment

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%)…

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Has Europe really turned the corner?

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….

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The ECB resumes corporate bond purchases — here is what you have to know

All eyes are on central banks these days as major monetary policy decisions have been driving global bond markets. The eagerly awaited September meeting of the Governing Council of the European Central Bank (ECB) has given bond investors much food for thought. In particular, the new round of its asset purchase programme (APP)—announced in true ECB fashion revealing only the bare minimum of de…

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What if the ECB starts buying corporate bonds again?

In his distinctively dovish Sintra speech two weeks ago Mario Draghi left the door wide open for further loosening of monetary policy in the Euro area. All options seem to be on the table to bolster European inflation numbers, including a new round of quantitative easing. Draghi’s remark about the ECB’s Asset Purchase Programme (APP) still having considerable headroom fuelled hopes amongst man…

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Could ‘Green Bunds’ be a cure for Europe’s economic malaise?

Compared to one and a half years ago, when the prevailing narrative was still revolving around global synchronised growth, the economic outlook for Europe has darkened significantly. From ‘peak optimism’ levels in late 2017, Euro area real GDP growth has slowed to 1.2%, while Eurozone manufacturing PMI has dropped by more than ten points. Even the notoriously optimistic ECB eventually had to co…

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Diverging fortunes of inflation expectations in the US and Europe

Inflation expectations in the US and Europe have been diverging lately and it comes as no real surprise, of course. After all, annual GDP growth in the US was running at a healthy rate of 2.6% in real terms in Q4 2018. The unemployment rate has fallen below 4%, putting upward pressure on wages, while economic sentiment indicators, such as PMIs, are in firmly expansionary territory. In stark con…

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BVTV: Markets go cold turkey

Market sentiment turned risk-off last week, largely due to the new US sanctions on Russia, which destabilised the ruble, and with the worsening of the situation in Turkey, which sank the lira and hit European lenders to the country. What are these two crises telling us about the state of the global economy? Watch some insights from M&G fund manager Wolfgang Bauer.

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BVTV: A Farewell to Shops?

Toys R Us and House of Fraser are some of the high street names that have faced tough competition from online retailers in recent years. Is the bricks & mortar model passé? Are some industries more resilient than others? And what does this mean for investors? Watch M&G’s Stephen Wilson-Smith explain how a French beauty giant sells more products online than in Latin America and how a US ice-crea…

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Time to sell Bunds?

German government bonds have gone from strength to strength in recent times; much like the German team at the World Cup – I wish! But is the latest Bund rally sustainable? I think not.

Let’s start with the bull case. In a recent blog, I described how Bunds had provided an efficient hedge against surging political uncertainty in Italy, due to the negative correlation between yields on German and…

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