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Many will disagree that the Fed has already hiked rates, but it has. Just by 5bp, and only techncial, but there is still an impact. Pricing the front end with the excess of liquidity is tough, but it still looks too low (in yield). The long end looks a bit lost now, having flatten...
As the dust settles, the implications of the ECB and Fed June meetings are subtle. EUR rates should be shielded to an extent from a hawkish Fed, but if the outlook deteriorates, long-end rates will continue falling. This is a bond market that refuses to bow to contemporaneous macr...
Last year's pandemic crisis U-trip took just 128 days - significantly less than the long-term average, despite a once-in-a-generation healthcare crisis. While the recovery speed has varied, the global economy is clearly on the mend. We believe that the next phase of the reopening/...
We had highlighted three risks to our base case, and the Fed managed to deliver on all three. The 5bp hike in the rate on excess reserves (from 10bp to 15bp) is being downplayed by the Fed as being just that - a technical move. The market reaction has been clear, but actually mute...
The Fed meeting looms large, and it appears some are taking a step back to reassess the hawkish risks. The belly of the curve offers best carry, but is also more prone to the repricing of Fed hikes. The ECB has already given the green light for carry trades, but has also created b...
US rates have snapped lower. It had been brewing. Over a half a trillion was returned to the Fed at 0% yesterday, as excess liquidity seeks a home for the night. The bond market sees this as a run on rates, and not a driver of a macro boom. Meanwhile, the ECB has removed a key ris...
The ease lower in market rates continues to pose questions about the extent of the inflation risk ahead; but also reflects liquidity seeking a home. As dovish expectations build ahead of the ECB meeting, more issuers have decided to make use of the benign primary market conditions. ...
We expect the European Central Bank to maintain its current pace of asset purchases even though the economic restart is gaining momentum. U.S. nonfarm payrolls growth picked up in May. We caution against extrapolating too much from erratic near-term data amid a powerful restart. U...
Taper talk is back, and with it the risk of higher USD rates volatility. Big liquidity going back to the Fed has eased, but is still very large. NGeu will make an earlier-than-expected start in the Euro bond market and is set to become a key contributor to the growth of sovereign ...
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...