Taking Back Control
It was a dramatic night last night as the Fed cut interest rates by 25bps, the first cut since December 2008, along with the premature ending to the balance sheet run off – however markets hardly moved!
Insights Topic
Monetary Policy
Slim Premiums a Signal for Caution in High Yield
Over the past few weeks there has been a noticeable increase in high yield new issuance, bringing a welcome flurry of activity to what has so far been a relatively benign year.
Is Bank Tightening Ammo For ECB Stimulus?
The euro area bank lending survey for the second quarter of 2019, released yesterday, suggests European banks are becoming more cautious and beginning to tighten lending criteria to various parts of the economy.
Powell Talks the Market Down
The dust is slowly settling after Wednesday’s FOMC rate decision, and more importantly the following press conference where Chairman Jerome Powell literally talked the market down.
With ABS Spreads at Pre-QE Levels, Where is the Value?
Bloomberg reported on Monday that since the European Central Bank started its Corporate Sector Purchase Program (CSPP) in June 2016, it has purchased €177bn of investment grade rated corporate bonds. Initially, as expected, spreads tightened rapidly, but since the first quarter of 2018, they have been gradually widening back out to pre-CSPP levels.
Evidence of Tightening in Italy
We have been discussing for a while what the quantifiable impacts of Italy’s populist government have been for the country’s economy.
Big Few Days For Europe’s Banks
As expected, the EBA 2018 stress tests, which were widely reported on yesterday did not have much of an impact on markets generally, although it’s worth looking at some of the stresses.
Call That a Correction?
A volatile last couple of weeks have certainly kept fixed income investors fastened firmly in their seats, with comments from Federal Reserve chairman Jerome Powell suggesting US monetary policy was “nowhere near neutrality” sending shock waves through global rates, credit and equity markets.
Healthy Tightening in UK Credit Conditions
This morning the much anticipated Q3 2018 Credit Conditions Survey was released by the Bank of England.
Another Reason To Be Skeptical Of Italy's Growth Projections
It may come as a surprise to some that the country currently experiencing the fastest pace of monetary tightening across developed nations is in Europe, where the main refinancing rate is well and truly anchored at -0.40%.
Italy Disappoints
This morning we arrived to the news that the Italian government was preparing a budget that had a deficit of 2.4%.
The Fed is Far From Dovish
Having listened carefully to the FOMC news conference last night, the message to us was clear – the Fed is pushing ahead with its normalisation of rates and the gradual shrinking of its balance sheet.