The coordinated central bank response to the COVID-19 crisis has pushed real yields in the developed world into firmly negative territory. While this policy action prevented a prolonged recession, it has left fixed-income investors grappling with an asset class where
What are Central Bank Digital Currencies (CBDCs)? What is the impetus behind CBDCs when the ethos of crypto goes against the very role of central banks? How will CBDCs affect the widespread use of cryptocurrencies or the need for crypto
In its meeting last week, the Bank of Japan (BoJ) announced several changes in its monetary policy framework, but also confirmed its policy to keep yields under control. While other government bond markets have seen quite some volatility in the …
Distinguishing between short and long-term issues Weekly investment update Keeping a weekly column like this one going brings home the sense of immediacy that frequently grips financial markets and that can fuel short-term spikes or dips as we have seen
This article assesses the communication of the European Central Bank (ECB) using Natural Language Processing (NLP) techniques. We show the evolution of discourse over time and capture the main themes of interest for the central bank that go beyond its traditional mandate of maintaining price stability, enlightening …
2021 began with renewed bouts of volatility with a tug of war emerging between concerns over slow vaccine rollouts especially on the continent and delays in US fiscal support against positive earnings trends.
As the largest vaccination programme in history commences, risk markets appear to be ignoring the logistical challenges or near-term downside growth risks from tighter lockdowns imposed after infection rates in Northern Hemisphere countries soared over the winter. With the S&P at or close to all-time highs and many …
Central banks in a pickle Uncommon truths We think tapering is off the agenda for 2021 and believe that central banks may purchase increasing amounts of assets. That may be good for risk assets this year but we worry where
The success of the Federal Reserve’s emergency intervention in March 2020 played a crucial role in stabilizing and improving liquidity in U.S. credit markets. The cessation of the Fed’s corporate credit facilities, in our opinion, lowers the risk of unintended imbalances within credit markets that could potentially …
For many years nominal interest rates, largely from developed markets, served the dual purpose of providing stable income and diversification benefits in many multi asset portfolios. Yet with yields on these assets testing the zero boundary, the allure to owning them looks increasingly tarnished. A small move in price can wipe out your income for the year.
Interest rates are at an all-time low, and even if inflation eventually picks up, it could take some time. Central banks, the first pillar of the investment cycle, are adjusting and are resolutely accompanying governments in this final battle against
Investment Insights Key takeaways Global corporate bonds have recovered strongly since the peak of the sell-off experienced in March. With credit spreads having tightened considerably since then, I believe the rally was justified for technical reasons due to unprecedented levels
T. Rowe Price Insights from our Global Fixed Income Team How the prospect of further monetary easing could impact bond markets. Central banks are not done yet. With economic recoveries under threat, several developed market central banks, including the European
While historically most asset managers have separated their stewardship capabilities from their investment processes, we believe that this will no longer suffice. Engagements and proxy voting decisions should be made in consultation with investment decision makers as it is the
T. Rowe Price Insights on Global Markets Our portfolio managers see selective potential in a range of asset classes. Even for those of us who saw reasons for hope this past spring, the market’s resilience in the face of the
#47 Tomorrow our event calendar is filled with five webinars! If you have spare time tomorrow, don’t miss out on an interesting session. Furthermore, next week December starts and this month has lots of interesting webinars as well. For example,
Column by Hendrik Tuch, Head of Fixed Income “Interest rates and yield curves have seen quite some volatility in the last few weeks as markets digested the election news and the coronavirus headlines. Ahead of the US elections, many investors
Of course, the impact of next week’s elections in the US goes well beyond the economic and financial realm, but from our narrow angle, we will follow the results across two dimensions. One is volatility: whether a winner emerges quickly
Gold Correction U.S. dollar strength kept pressure on gold throughout September. The dollar, as measured by the U.S. Dollar Index (DXY),1 trended higher as the stock market trended lower from its all-time highs. The pandemic stimulus-driven bull market looks to
Webinar – New world, new challenges: Rethinking the investment landscape 2020 has been a year like no other. A global health crisis, as yet without an end in sight, that has transformed the world and is accelerating change across societies.
Al drukt de covid-19 pandemie de economische groei en inflatieverwachtingen, centrale banken en overheden zetten hier steeds verdergaande stimuleringsmaatregelen tegenover. In combinatie met trends als deglobalisering, kan dit een structurele kanteling in gang zetten die de inflatie juist op een
Spotlight In early-September, the US Federal Reserve Chair Jerome Powell announced a shift in the inflation containment policy regime that had been in place since the 1970s. Recall how, facing rapidly rising and eventually double-digit inflation, then Fed Chair Paul
Abenomics at a glance Referring to the economic policies advocated by Prime Minister Shinzo Abe since his victory in the 2012 general election, Abenomics consists of three arrows: aggressive monetary policies, fiscal consolidation and a growth strategy. The key aim
Market Flash All eyes were on central banks. As expected, the Fed left its rates unchanged. It even said they would not move until inflation rose above 2% and stayed there for some time, a situation it does not expect
Key points The divergence between a decisive Fed and a more hesitant ECB is an interesting debate but it hides the fact that on both sides of the Atlantic monetary policy through its traditional transmission channels is facing diminishing returns.
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
The US Stocks drifted higher through much of last week, although the catalysts for the move were perhaps harder to identify than usual, and trading was subdued relative to recent months. The week’s busy economic calendar appeared to play some
Aggressive interest rate cuts, liquidity provisions and quantitative easing worked well. Buying facilities rather serve as a backstop. Based on a diminishing marginal effect from Large Scale Asset Purchases (LSAP), the Fed might do more for longer to support
In many things 90% is just fine; for an economy it is miserable Bankruptcies and the fear of a second wave Life will be hard—at least until a vaccine or a treatment is found
How interest rates could remain at emergency levels for a sustained period. KEY INSIGHTS Central banks are likely to remain cautious for some time, keeping the short end of developed government bond curves anchored. Longer-dated government bonds could face greater volatility
The Covid-19 pandemic triggered a wave of support to keeps banks functioning efficiently and economies ticking over through lockdowns. We look at what action has been taken and its impact on the health of the banking sector.
Central Banks: interest rates near zero The Fed kept its interest rates unchanged. The ECB kept its interest rates unchanged. No movement on BoJ interest rates since 2016.
Key points: Bond markets have stabilized, but the economic recovery will be measured in years. Central banks, as well as governments through fiscal stimulus measures, have played a key role in supporting markets. This is a time to be patient,
From unconventional monetary policy to unprecedented policy coordination Unprecedented policies will be needed to respond to the next economic downturn. Monetary policy is almost exhausted as global interest rates plunge towards zero or below. Fiscal policy on its own will
As the world assesses what will change after the COVID-19 pandemic, Jim Cielinski, Head of Fixed Income, introduces the questions Janus Henderson expects to be key in setting investment strategy going forward. We seek to share the insights of our
White Paper Rising Stars in a New (Fed) World Recent unprecedented action by central banks, notably the Federal Reserve on April 9th, has helped markets recover meaningfully. This has caused many investors to wonder, “What do we do next?” or,
AXA Investment Managers ‘Onder Economen Lunch’ Virtuele meeting, dinsdag 12 mei 2020 Overheden en centrale banken hebben met hun noodingrepen erger voorkomen en op financiële markten gloort herstel, maar de vooruitzichten per sector liggen mijlen uiteen en voor de economie
#20 – Top Five Best Read Research on OpinioPro And it’s Saturday again: the day for us to publish our Top Five Best Read on OpinioPro this last week. Populair tags were ‘asset allocation‘ and ‘equities‘, furthermore our event calendar
Cross Asset Investment Strategy Markets (financial cycle) are leading the economic cycle and will bottom out before the end of the coronavirus pandemic. However, they would stabilise once reassured on three points: The cyclical pattern of the pandemic, or when
An Academic View As the COVID-19 virus continues to tighten its grip on the world – causing wide spread lockdowns and large-scale disruptions to global supply chains – governments, central banks, and regulators have been left with little choice but
Visie op asset allocatie Vorige maand hielde we nog enige slag om de arm in het antwoord op de vraag of de verspreiding van het coronavirus een wereldwijde recessie zal veroorzaken, maar inmiddels is dat wel duidelijk. Terwijl nu ongekend
The court ordered the German government to ensure the ECB carried out a “proportionality assessment” of its vast purchases of government bonds. Whilst the ECB should be successful in proving that its purchase scheme was necessary and “proportional”, further expansion
Economic crises often lead to a reshuffling of the economic and political ideological corpus. The Great Depression gave birth to the modern Welfare State, a hallmark of most liberal democracies until the oil shocks in the late 1970s. The 2008
Week Ahead Focus: German Federal Constitutional Court ruling, US Labor Market Report, Eurozone public debt This week, the German Federal Constitutional Court ruled on a lawsuit against the purchase of government bonds by the ECB and thus the Bundesbank under
Allocation views We have seen a robust global central bank policy response that, in its breadth and scale, is larger than all the stimulus programs seen during the 2008 global financial crisis. Events and timelines have been compressed in this
Rates in lockdown for longer With the outbreak of the coronavirus hitting the global economy, central banks have stepped up to the plate by delivering significant amounts of easing. Official yields are now at or below zero for all developed
CEE Market Insights This week, the central bank meetings in Czechia and Serbia should be the key events in the region. While stability of rates is broadly expected in Serbia, the Czech National Bank is, in our view, about to
Short Note ECB ECB Council Meeting At its meeting which ended today, the Governing Council decided on two further measures aimed primarily at ensuring that banks had sufficient liquidity at low interest rates. The ultimate goal is to keep lending
While the market has staged a spectacular and unanticipated rally, looking at the broader indices can be somewhat misleading. Year-to-date, the S&P 500 Index is still down -15%, but large cap tech and healthcare indices are down 3% or less.
