Yield curves typically slope up, with long maturity government bonds promising higher returns than short maturity bonds. Much empirical evidence says the slope of the yield curve predicts economic activity (e.g., Harvey 1988, Estrella and Hardouvelis 1989, Fama and French
With 2 ½ months left until Mario Draghi steps down as ECB chief, what will be his legacy? On the one hand, he will be forever remembered for those three words “whatever it takes”, which many people credit for having
Germany’s GDP contracted by 0.1% qoq in 2019Q2, down from +0.4% in Q1. No further details have been published yet, but we refer to the press release of the Statistisches Bundesamt for visibility. GDP growth was weighed down by the
The Federal Reserve lowered its target policy rate for the first time in over a decade, ending one of the longest hiking cycles in the past 30 years. While the cumulative increase in the federal funds rate of 225 basis
The significance of asset class diversification for investors As we experience the longest bull market in stock market history, considerations of what may come next pervade investor's consciousness.1 Thoughts of previous bear markets — the circumstances behind their evolution and
TIFF Insights An Interview with Scott Malpass and Jay Willoughby Introduction In the recent past, American investors’ views on China have rotated from unblemished enthusiasm to substantial caution. From the radical reforms of Deng Xiaoping in 1978 until quite recently,
History shows that the economy and fi nancial markets are dominated by long-term regimes that at some point come to a break point, where one regime gives way to a new one. This shift may not be easy to detect.
Behavioral scientists are skilled at analyzing why we make mistakes, and financial and investment decisions have been a ripe field to till. The challenge lies in overcoming our biases that result in poor decisions, particularly in today’s late economic cycle
Financial market volatility has risen in August. This has come amid the ongoing US-China trade conflict (along with other geopolitical risks), and some weak economic data releases. Risk assets such as equities have sold off, while safe-haven assets have rallied
The U.S. economy grew at an annualized rate of 3.1% during Q1 2019 and is on track to grow around 2.9% in Q2 2019.1 We expect GDP growth to slow in the 2nd half of 2019 as the effects of
Abstract: Academics and research analysts in financial economics frequently use returns on government bonds for their empirical analyses. In the United States, government bonds are also called Treasury bonds. The Federal Reserve publishes the yield-to-maturity of Treasury bonds. However, the
Emerging market bonds shrugged off recent trade warrelated concerns to strengthen in June. Local currency bonds, measured by the JP Morgan GBI-EM Global Diversified Index, returned 5.5% during the month, outperforming hard currency bonds, measured by the JPMorgan EMBI index,
Corporate stock buybacks in the US have grown in frequency and size over the past decades (see Figure 1 on the next page), leading to a host of concerns from market commentators. Among the most frequent concerns are that share
Historically, fixed income investors have been able to generate a healthy income stream from high quality bonds. However, given the current environment of ultra-low yields, income has been harder and harder to come by. With the Fed poised to cut
Earlier this week, a closely-watched economic indicator, the difference in yield between the 10-year U.S. Treasury bond and the 2-year U.S. Treasury bond (2s10s), inverted. This inversion, however brief, was further evidence of investor concern over the current state of
Last week saw both stock and bond markets swing wildly due to questions around the future path of Fed policy, an unexpected depreciation in the Chinese renminbi, and uncertainty around trade. While manufacturing remains weak given the lack of clarity
It is all relative in the global capital markets. Over the last year or so, the high currency-hedging cost has made US dollar corporate bonds less attractive for international investors despite the relatively high level of US yields. This is
In addition to renewed trade tensions between the US and China, political tensions, especially in Asia, have risen – China vs. Hong Kong, Japan vs. South Korea, India vs. Kashmir – triggering a rise in risk aversion for emerging assets.
Oil and gas producers are oen seen as vulnerable to global efforts aimed at curbing climate change. But some European energy groups might become part of the solution to climate change rather than part of the problem.
China’s current account has defied consensus (https://china.bnpparibasam.com/thefussaboutchinascurrentaccountdeficitandglobalcostofcapital/) , and recorded a surplus of 1.6% of GDP in Q2 2019, up from a 1.5% surplus in Q1. How can that be? The answer must lie in the financial and capital accounts,
Central bank watcher: Time to deliver Fed: make life easy and do 50 ECB: A september to remember PBOC: Easing bij reform?
Quarterly Analysis At a glance… – New manager searches illustrate a strong focus on improving portfolio resilience. Within equities this manifests as appetite for low volatility and quality; in fixed income we see increased interest in investment grade bonds versus
U.S. Treasury yields declined again last week, with the yield difference between the 3-month T-bill and the 10-year Treasury note inverted further. Market expectations for a Federal Reserve (Fed) rate cut at the September meeting are high. However, the magnitude
Lower economic growth leads to slower growth of global oil demand Due to the new escalation of the trade war between the US and China an agreement seems to be further away than ever. The import taxes have a negative
The recent escalation in U.S.-China tensions reinforces our view that trade and geopolitical frictions have become the key driver of the global economy and markets. We stress the importance of portfolio resilience in this environment, yet view the decisively dovish
