Author profile

Wolfgang Bauer

Years in the bond markets: 5

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

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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Never a dull moment – trying to make sense of last week

Political turmoil in Italy and Spain, escalating trade tensions and, for good measure, unexpectedly strong US employment data – to say that markets had a turbulent few days would be an understatement. Taking a step back, here are three lessons I took away from last week.

(1) Market sentiment shifts can be brutal

Political risks in the European periphery are real – a statement that might sound t…

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The front-end of the US Treasuries curve: short and sweet?

With the notable exception of the upcoming royal wedding, it would be pretty difficult to find a topic that is currently more over-analysed than the flattening of the US Treasury yield curve. On this blog as well we have pondered potential implications for credit valuations and possible counter-measures the Fed might employ. Still, one aspect that has arguably not received enough attention in t…

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Are sovereign bond-backed securities the key to financial stability within the Eurozone?

Creating a Eurozone-wide safe asset and thus diversifying sovereign risk within the currency union without the need for sovereign debt mutualisation – sounds like having your cake and eating it, doesn’t it? Well, according to the European Systemic Risk Board (ESRB), sovereign bond-backed securities (SBBS) might do the trick. SBBS are merely an idea, discussed in ESRB working papers, feasibility…

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BVTV: Getting to the bottom of subordinated debt

Subordinated debt enjoyed an excellent year in 2017, AT1 (Additional Tier 1) bonds in particular. But what are the unique features of this sub-asset class and do AT1 bonds still offer value? M&G credit analyst Mark Robinson, who focuses on the banking sector, joined me this morning to explain the challenges that today’s tight spread levels potentially hold for investors.

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A tale of two bonds – diverging fortunes for GKNLN 22s and 32s

It was the best of times, it was the worst of times – to phrase it in a Dickensian way – for bonds of British automotive and aerospace components company GKN. After Melrose Industries, an investment firm specialised in turnarounds of manufacturing businesses, had made an unsolicited takeover bid for GKN on 8th January, GKNLN 3.375 05/12/32s have enjoyed capital gains of 1.7%, whereas the cash p…

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Did the ECB get their fingers burned with Steinhoff bonds?

Credit risk is real. It’s easy to forget this platitude in times when both investment grade and high yield credit markets go from strength to strength. Even one of Europe’s foremost credit investors – the European Central Bank (ECB) – has recently been reminded that there is indeed the risk of permanent loss of capital when buying corporate bonds.

Every week the ECB updates the consolidated lis…

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2017 investment grade review – a rising tide lifts all boats

Let’s be honest, 2017 won’t go down in history as the most exciting year for investment grade (IG) credit markets. IG credit spreads have moved more or less in one direction only: lower and lower. Still, there are valuable lessons to be learnt. Here are our key takeaways.

Positive mood swing in Europe drove EUR IG outperformance vs USD IG.

Back in early 2017 the logic was as follows: After the…

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