bond market

Leverage loans. The next trigger?

Yield not equal to return

Chris Iggo (AXA IM) | Bonds have sold off a bit last week, but I believe that the bull market remains in place. Global monetary policy is about to be eased yet there are reasons to be relatively relaxed about the near-term growth outlook. The mini-bond sell-off will make yields a bit more attractive. However, yield does not equate to return unless you hold bonds to maturity and there remains scope for returns to be substantially higher than current yields, especially at the long-end of the maturity spectrum.


EUR low grade corporate bonds: Getting dressed up for the ECB

Markus Allenspach (Julius Baer) | We maintain our Overweight on EUR low-grade bonds against the backdrop of low money-market rates and remote recession risks. Moreover, we share the view of the market that the odds for a new corporate-sector purchase programme of the European Central Bank are rising, which could additionally lift bond prices.


Lower rates, no recession

Chris Iggo (AXA IM) | Navigating through all the noise out there, it seems the most sensible expectation that investors should have is described by “lower rates but no recession”. Central banks were more dovish again this week and the Fed looks as though it is ready to meet markets expectations on cutting rates. There are risks to growth from a range of things, but we shouldn’t underestimate the power of the easier monetary policy message.


Glacier

Action against climate change: too many ambiguities

Miguel Navascués | Everyone talks ever more passionately demanding that climate change be slowed by changing from energy based on oil and gas to one that does not produce CO2. But no-one explains if technological change will really allow this to happen in time.

 


Fixed income discounts a recession

Alphavalue | The increasing tensions in the trade war between the US and China have significantly raised prices in the bond market. While in Europe the yield on the Bund has fallen to -0.18%, in the US the T-bond is marking two years low with a TIR of 2.22%.

Change of cycle to cyclical stocks to defensive

JP Morgan just can’t agree

While the US bank’s chief economist in pointing to systemic risks, financial bubbles and market complacency, his colleagues in Spain believe “this tale about market manipulation is not real.”


ECB next meeting

European Government Bonds: Too Early For The ECB To Announce A Change In Guidance

Spain’s government bond rating has been upgraded by Fitch to A- from Baa+, Greece has also seen the rating lifted by Standard &Poor’s, and the US once again experiences a shutdown of non-essential government operations. The biggest topic for the bond market, however, will be the press conference of the European Central Bank (ECB) scheduled for Thursday.



Stable front-end Eonia rates (bp)

Resilient Eonia fixing, fragile long Eonia rates

LONDON | June 9, 2015 | By Giuseppe Maraffino (Barclays) | Eonia and Euribor fixings (as well as OIS rates up to 1 year) have been immune to the new round of high volatility. This is because they are more sensitive to liquidity conditions and the current abundant liquidity surplus at about EUR300bn has been an important protection.


Ice Age the movie

Negative rates: Ice age for savers

Asoka Wöhrmann (Deutsche AWM) | Negative interest rates are new economic territory. However, as yet, there is no sign of a major cash exodus to avoid sub-zero yields.