Institutional Investor (September 19)
“A sense of dissonance” is overcoming global markets, according to the Bank for International Settlements. “Falling bond yields are normally associated with subdued growth…yet stock markets around the world have rallied even as corporate profitability has lagged.” Furthermore, the ten-year yield on many major sovereigns is “running well below the nominal rate of growth in gross domestic product, breaking a 65-year pattern in which the two have tracked each other closely.”
Tags: Bank for International Settlements, Bond yields, Dissonance, GDP, Global markets, Growth, Profitability, Sovereigns, Stock markets
Financial Times (June 30)
“The UK’s decision to leave the EU will not have any immediate, direct negative consequences for the ratings of states and major banks across Asia Pacific,” according to Fitch Ratings who also warned that “Japan could prove the exception…given the yen’s haven status and resultant strengthening posing a risk to policymakers’ planning.”
Tags: APAC, Banks, Brexit, Consequences, EU, Fitch, Haven Risk, Japan, Negative, Ratings, Sovereigns, UK, Yen
Institutional Investor (June 28)
“Yields are negative in multiple European markets,” for both sovereigns and corporate bonds. “The zero bound has therefore been broken, proving that it is just that—a mere boundary, as opposed to an impenetrable threshold.” Given the demand for liability matching and quality assets, there’s no certainty that yields can’t fall further into negative territory. “All of this serves to highlight the strangeness of the world we now live in. Daily usage of words like ‘unprecedented’ and ‘exceptional’ renders them almost meaningless. In this case, however, they ring true. Corporate bond yields turning negative truly is unprecedented.”
Investment Week (May 14, 2013)
A recent sentiment poll by Bank of America Merrill Lynch shows that worries over the commodity sector are moving to the fore as fears over Europe dissipate. “A quarter of respondents to the Bank of America Merrill Lynch’s monthly poll on manager sentiment said a commodity collapse is the number one tail risk, an increase from 18% in April.” In contrast, respondents identifying “EU sovereigns and banks as the number one tail risk dropped to 29% from 42% in April.”
Tags: Bank of America Merrill Lynch, Banks, Commodities, EU, Fund managers, Sentiment, Sovereigns, Tail risk
