There's been a fair bit of talk about a pending US recession. Much of this chatter has been fueled by simple analysis of the slope of the yield curve, which is widely viewed as a strong predictor of recession. What this analysis doesn't do, however, is provide any information on... Show More
Bonds are typically viewed as a defensive allocation in portfolios, however, in a world of rising interest rates, there are concerns about the impact this will have on fixed income returns. Stuart Dear, Deputy Head of Fixed Income at Schroders explains that the dominant driver of bond returns is the... Show More
While investors await the decision by the policy-setting boards of the Federal Reserve and the Bank of Japan, carry on remains the theme in bond markets. The Fed’s retreat from hawkish advances, the European Central Bank’s and the BoJ’s battle against positive yields and the Bank of England’s bazooka following... Show More
To unashamedly paraphrase Mark Twain’s famous quip, reports of the death of the bond market are greatly exaggerated. Despite low starting yields, and in our view, poor valuation support, Australian fixed income has returned a healthy 3.6% year-to-date. While of course that’s good news for investors in Australian debt, there... Show More
Markets endured a dramatic round-trip over the quarter, revealing the inherent volatility of an unstable relationship between markets and central banks. The January and February weakness in equities and credit was partly caused by fears that central banks were either creating instability (for example as bank profits are crimped by... Show More
It was a rough year for markets as policy divergence in the West and slowdown in China drove USD strength, commodity price weakness and emerging economy instability. Sovereign bond yields ended little changed, but (especially longer tenor and riskier) credit weakened on default concerns in the energy sector and heavy... Show More
2015 has been a difficult year for investors as markets have had to come to terms with a couple of important changes to the central banking status quo of recent years: 1) the Fed stopped easing and has turned its policy focus to when to raise rates, and 2) the... Show More
The world’s financial markets maintain an unhealthy addiction to policy accommodation, even if the economic benefits of it are uncertain. Somewhat perversely now, weak data is cheered because it means accommodation will last for longer or will be employed even more powerfully. In the latest edition of The Fix “An... Show More