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Bonds and stocks rarely stay positively correlated for long. Something had to give. Unfortunately, it was market sentiment. We’re now increasingly in a "risk off" environment where markets reflect what they see as a deteriorating outlook. The ECB pre-meeting expectations ma...
Bonds are back in favour, and there is a range of potential reasons why that is so. As always, there is never only one explanation, but the usual central bank suspects bear some responsibility. The Fed's rising tide of cash has to be invested somewhere, while dovish ECB comments a...
Volatility sellers have been proven right in May, and carry has become more attractive. Consumer confidence data will help gauge inflation pressure and labour market tightness, but we doubt this will prove decisive, thus putting carry traders in the driving seat near term. The pro...
One of the main questions that will determine the near-term direction in financial markets, and in rates in particular, is whether the current spike in inflation heralds a period of faster activity and price growth, or whether it will bring the demise of the current recovery. The most...
Issuers and investors alike are embracing Environmental, Social and Corporate Governance (ESG) as core financing or investment philosophies. The majority of the inflows seen in Euro IG funds have been into ESG funds. In fact, non-ESG funds have generally seen outflows. It is also visi...
Eurozone market rates continue to creep higher, with the German 10yr about to count down to zero. The fact that this is happening as US market rates remain in a deep Fed-induced trance is not a bad thing. Rather it suggests if, or likely when, US market rates awake from their slum...
Tapering fear is not affecting all financial markets alike, reflecting the nature of purchases, but also the drama surrounding each ECB meeting. Even if the path towards normalisation at the ECB is far from straightforward, the extent of its approximately €100 billion purchases...
Supply-side bottlenecks have increased prices for businesses. The longer these disruptions last, the higher the likelihood businesses pass on the rising costs to consumers. The impact of supply chain disruptions will also be felt in the medium to long term. For further detai...
One weak US payrolls number does not change the big picture, and one big inflation print tomorrow will likely not also. It will confirm a big rise in prices in the past year though. That's a clear outcome, but the Fed needs more - a string of them. This is a bond market that has i...
Although large negative real yields have become the norm in core Europe, they were less common in the US. Covid-19 changed that. The re-opening should change that back, but so far it hasn't. A big payrolls report followed by a near-4% inflation number next week should tip the balance....