TURNKEY SOLUTIONS FOR WEALTH MANAGER AND FUND MANAGER
Year-to-date long-term government bonds have slid across the world, reflecting investors’ expectations of an economic recovery. The US Treasury 7-10yr total return index is down -1.7% ytd (current yield 1.18%), while the German Sovereign 7-10yr total return index is down -0.7% ytd (current yield -0.43%). Should interest rates continue to creep up, investors in long-duration […]
Government Bonds slide Read More »
Inflation remains a distant threat as both the output and unemployment gap will remain meaningful in 2021. That said, year-over-year inflation rates will temporarily jump as numbers were extremely depressed at the nadir of the recession. The ratio between copper and gold prices is a gauge of economic confidence and has been pointing upwards. The
No central bank and no government wants to remove economic support too quickly and there is plenty of economic stimulus for companies profit margin to recover over the coming months. This is thanks to the positive effects of operational leverage on earnings. Example: a company has USD 100 in revenues and USD 10 in profits.
Europe is back in partial lockdown and economic volatility is expected to be higher beginning of 2021. At the same time, the European Central bank continues to press on the gas pedal and Eurozone money supply M1 growth is expanding at 14% yoy. These are levels last seen in 2008 and 1999. Money supply is
Europe is back in partial lockdown Read More »
Investment grade (IG) bond credit spreads have further tightened and have reached almost pre-Covid levels. The upside of IG bonds is limited taking into account their embedded “duration” feature. In comparison, spread levels in the high-yield (HY) market are still wider and have more room to tighten. High yield bonds are typically more cyclical in
Investment Grade credit tightened Read More »
In the first half of 2020, major central banks purchased USD 6 trillion in public and private sector debt. In comparison, the same central banks spent USD 1.5 trillion on quantitative easing measures after the Global Credit Crisis in 2008. However, this was over a time span of 5-years. The massive intervention of central banks
Central banks purchased 6 tln debt Read More »
Central banks unprecedented influence on capital markets and their coordination with central governments will put a backstop on the economy in the US and Europe. Rating agencies have started to revise downwards their projections for defaults, which acts as an additional support for credit markets in general.
Central banks unprecedented influence on capital markets Read More »
In a surprise move, the US Fed cut interest rates by 50bps to the 1-1.25% range. At the same time, the yield on the 10-year US Treasury note fell below 1% for the first time ever. There is a market saying that goes “If the Fed cuts rates and bond yields rise, the market believes
US Fed interest rate cut by 50bps Read More »
The Hong Kong Tourism Board November 2019 number for visitor arrivals to Hong Kong dropped to 2.6 million. This is close to half of the long-term average since 2011 of 4.65 million arrivals per month. Early indicators show a continuing drop going into 2020 and the damage to Hong Kong’s economy from the coronavirus outbreak
COVID-19 – Hong Kong Tourism Read More »
Yields on US and European contingent convertible bonds (CoCo) have dropped to 4.2% and 2.7%, respectively, and option adjusted spreads (OAS) are below -1.8 standard deviations for both segments. Investors are flocking to the deeply subordinated notes because negative interest rates and enhanced bank capital buffers have bolstered the appeal of their higher coupon payments.
Contingent Convertibles (CoCos) Read More »
