Silence is Golden
After a volatile fortnight in the market, we appear to be closing this week in a relatively calm manner.
Insights Topic
TwentyFour
6 Reasons Government Bonds Yields To Rise Further
Our base case for rates markets is a gradual shift higher, but there are reasons to consider why even our forecast is too constructive and the move higher could be more substantial.
All change for the markets, or maybe not
Following Monday’s volatility in the rates market and the subsequent “meltdown” in US equities, which saw the Dow Jones falling by more than 1,500 points intraday; yesterday had a more orderly feel to markets, and ultimately the 3 major indices in the US, the Dow Jones, S&P 500 and Nasdaq, are all still in positive territory for the year to date.
Rising Rates Creating Mini Taper Tantrum
To understand this breakdown in correlation we need look no further than the source of the risk: the answer, just like in May 2013 when Bernanke gave us his taper tantrum, lies in rising rates.
Are Gilts in a Bear Market
Yesterday, 10yr Gilts closed at 1.510%. Whilst that individual yield level does not sound particularly significant, in a historical context it is possibly one of the most important month end closing levels I have witnessed in more than 25 years in the markets.
Global Housing Update
As we provide lots of commentary on the maturing economic cycles and monetary policy across the globe, we thought it was worth highlighting some points from Fitch’s recently published Global Housing Update and its useful insights into how the global housing markets are faring.
Be Aware Of Policy Change at the Fed
Our forecasts for longer dated government bonds were for yields to gradually rise during 2018, but not in an uncontrolled manner.
Should We Worry About Consumer Credit?
As the credit cycle develops across different economies, our asset allocation changes to reflect that, and if it looks to be at a mature stage in a specific country then our natural focus on credit quality becomes more important; we are always trying to avoid next year’s problem credits, whether in the financial, corporate or securitised markets.
If rates were to rise like 1994, would IG credit produce a positive return?
1994 was my first full year in the markets, and what a baptism of fire it was.
Supportive Technicals for AT1s
As we start the new year and approach the 5th anniversary since the issue of the first European Additional Tier 1 (AT1) bond (BBVA 9% Perp-18), it is a good time to re-assess the sector in the current market.
How robust are CLOs through a recession?
As most of our readers know, ABS is an asset class that lends itself well to detailed underwriting, from onsite due diligence through to cashflow and risk modelling.
Strong Technicals Dominate First Week's Trading
The magnitude of the strong beginning to the year has probably surprised even those who were forecasting a positive start to 2018.