RBA Divergent Difficulties
Cash investing remains extremely challenging with institutional investors trapped between an extremely dovish Reserve Bank of Australia (RBA) and markets pricing in inflation and steepening yield curves.
In times like this, it’s important to understand how the market can impact your cash portfolio. As the Chinese government and global central banks continue to unveil unconventional policies, the outlook for Chinese corporate issuers remain uncertain. Watch Andy Chang, Credit Analyst, and Kheng Leong Cheah, Asia Pacific Head of Global Liquidity Sales as they examine the China’s onshore credit market – from investment implications, impacts of major market events, to an industry view, and investment implications.
Cash investing remains extremely challenging with institutional investors trapped between an extremely dovish Reserve Bank of Australia (RBA) and markets pricing in inflation and steepening yield curves.
The surprise withdrawal of liquidity by the People’s Bank of China in the last week of January triggered a spike in short-term interest rates. Aidan Shevlin, International Head of Liquidity Fund Management, shared his perspectives on China’s monetary policy.
China’s bond market has seen an unusual wave of defaults over the past month – triggering a jump in credit spreads and raising investor concerns. Find out the implications to cash investments and why independent credit research remains important.
The RBA cut base rates and announced the introduction a traditional quantitative easing program “to support job creation and the recovery of the Australian economy from the pandemic”. This was by far the most wide-ranging monetary policy actions by the RBA – with significant implications for the AUD interest rates and investors.
Escalating political and trade tensions, strong international demand for HKD and increasing connection with China, have weakened the Linked Exchange Rate System (LERS) – with significant implications for HKD cash investors.
The recent Melbourne lockdown and uneven global recovery have increased market speculation that the RBA will intervene further to support the recovery – with significant implications for the AUD and short-term interest rates.
Majority of Asia-Pacific markets administer and maintain their own IBORs, and are responding to IBOR transition differently.
Read the latest review of Global Liquidity market and portfolio commentary across the Americas, Asia Pacific, as well as Europe and UK.
The combination of a central bank policy pivot, better economic data and market technical factors contrived to end China’s bond bull market – but is the upward momentum sustainable, and what are the implications for investors?
We examine how ZIRP works, its impacts, likely timeframe, whether we expect rates to go negative (spoiler: we don’t) and options available to liquidity investors.
Our investment team navigated through the recent market volatility and, with the help of our clients, weathered through the market storm.
Hear how Global Liquidity stayed steadfast in our commitment to clients over the past two months.
Libor spreads are elevated, indicating cheapness in the funding markets, but we expect them to normalize in the near to medium term.
Learn from Global Liquidity Portfolio Manager, Aidan Shevlin, about latest monetary policies in Hong Kong and how that impacts HKD interest rates and investors.
Surging demand for U.S. Treasury bills (Tbills), in a “flight to quality” sparked by the coronavirus pandemic, created unusual market conditions.
Without support from central banks in the offshore space, Money Market Funds will likely be slow to get back up to full speed in purchases and duration, writes Olivia Maguire, Global Liquidity Portfolio Manager.
A new rule on calculating the supplementary leverage ratio—a capital adequacy measure—allows expanded balance sheets and potentially greater expansion of quantitative easing.
Olivia Maguire and Joe McConnell evaluate central bank reactions to COVID-19 in the UK and Europe.
Learn from Global Liquidity Portfolio Manager, Kyongsoo Noh, about key differences between the market environment today and 2008.
The Federal Reserve announced new programs on March 23, 2020. Learn from Global Liquidity Portfolio Manager, Kyongsoo Noh, on the latest facilities from the Fed.
Comments on the recent volatility and pace of monetary policy.
Making monetary policy: The Federal Reserve moves in the right direction
COVID-19 has the world on edge: What does this mean for short term fixed income, volatility and cash investing, cash policy.
Libor, the world’s most widely used benchmark for floating rate instruments, is transitioning SOFR.
We have extensive resiliency procedures in place to protect our employees, clients and businesses, ensuring we can continue to operate efficiently in times of stress.
The Covid-19 outbreak has accentuated the negative implications for international trade, as well as domestic productivity and tourism in Singapore.
The recent coronavirus (2019-nCoV) outbreak in China has increased investors’ trepidation and financial market uncertainty.
After a prolonged record low, forwards market now see a 50/50 chance of a cut in the overnight cash rate during 2019. However, a weaker housing market and softer consumer demand lower the probability of a RBA’s rate hike.
Short stories on the global recovery, plummeting COVID infections, Larry Summers & the bond market, SPAC sponsors, renewable energy, the Texas power outage and the battle for the Republican Party.
The SPAC capital raising boom, and why Biden’s early stage energy policies are more likely to increase oil imports rather than reduce emissions.
Equity markets are flying. So is COVID. So are corporate reactions to Congressional objectors.
Michael Cembalest’s views on what will drive markets and the economy in 2021, as well as the challenges we face that stimulus and vaccines can’t solve.
The Jan 6 Joint Session of Congress is shaping up to be a very contentious meeting. Here’s a brief 2-page primer on the rules of engagement, for those interested.
The belief in election illegitimacy is spreading faster than COVID. With field reporting from Alexander Fleming, Rutherford B Hayes, Richard III, Bob Newhart and the Attorney General of Ohio.
The Armageddonists were not rescued from underperformance purgatory by COVID, and markets are at all-time highs again with prospects for further gains in 2021. However, I can think of something that could rescue them, at least temporarily: the risk of electoral illegitimacy and Constitutional mayhem on January 6th. See pages 4-6 for a review of all the rules and procedures in play, including an update from Wayne County MI, and a hyperlink you may need this Thanksgiving.
For the first time in 100 years, a challenger unseated an incumbent President at a time of strong economic and market tailwinds. However, the election delivered a clearer referendum on the President himself than on policy issues dividing Democrats and Republicans; it looks like divided government may remain. So, in this week’s Eye on the Market, a (possibly) divided government investor playbook. To conclude, comments on this morning’s Pfizer vaccine news and the road to herd immunity (approval, distribution and acceptance).
During the President’s speech on Thursday, he made it clear that the next step in the process will be a wave of GOP litigation in an effort to invalidate votes, with a special focus on the treatment and counting of absentee ballots. In this brief note, we review the election rules, legal issues, court precedents and election permutations which all lead to one place: Pennsylvania, whose state legislature holds the key to whether the Congress will have to sort out multiple slates of electors in early January.
As the election outcome increasingly looks like a split decision (President Biden with a GOP Senate), we’re preparing for intense legal battles in the courts, and also analyzing the market-related policies under control of the Executive Branch that Presidents can implement on their own without legislative approval: energy policy, some healthcare changes, China trade policy, immigration, Iran, antitrust policies and net neutrality.
We’ve all been focused on the election recently, but there are other topics worth covering since they will affect markets regardless of the election’s outcome: The United States vs Google, Europe vs COVID, and China vs US COVID aftermath.
The problem with states that do not allow pre-election processing of absentee ballots; a COVID Rorschach test; Trump and Biden deficit explosions, equity market impacts and trends that are being priced in as Democratic Sweep odds rise; Vaccine timing & virus-sensitive businesses.
The election as referendum on America: how well does the “system” work, and for whom?
The cost of engineering a US recovery as the world waits for a vaccine; Biden agenda on taxes/spending; Tech stocks (2020 vs 1999); COVID and The Fountainhead; US election rules, dates and process in light of derogatory comments on mail-in voting by the President and Attorney General
Michael Cembalest, Chairman of Market and Investment Strategy, shares weekly insight and analyses on data covering the impacts COVID-19.
Prospects for further US employment and profits growth are improving, but the US is now running the 3rd highest infection rate in the world. In infection hotspot states, governors are relying on falling mortality as the reason to make only minor policy adjustments. This week, we look at why mortality is diverging from infections and hospitalizations, and more broadly, at whether a US scientific trust gap has played a role in the recent infection surge.
COVID temporarily reduced global CO2 emissions to 2006 levels. In our tenth annual energy paper, we examine when and how renewable energy transitions might result in more permanent reductions. We also analyze the financial, political and environmental risks to US energy independence, and whether stranded asset risk is the primary reason for the lowest oil and gas valuations in 90 years.
The US recovery; The flood of money and market returns; Globalization lives; Reducing COVID mortality through vascular treatments; Realistic timetables for never-been-done before vaccines; Sweden’s COVID experiment is not what you think
Tracking the rebirth of the US consumer with real time data as a function of infection levels and state policy. Additional topics: no evidence yet of material second waves of COVID infection, and a round-up of the latest news on vaccine trials (Moderna, Oxford, Sinovac) and anticoagulants.
In this week’s Eye on the Market, we review topics from our recent client Zoom calls. Topics include: risk of inflation, second waves of infection, the effectiveness of lockdowns and Biden’s taxation and spending agenda.
An update on the COVID-19 crisis as the US prepares to reopen despite having one of the highest infection rates in the world. Additional topics: monoclonal antibodies and anti-viral trials; the growing gap between markets and the economy; S&P 500 earnings haves and have-nots; regional equity performance (Europe loses again) and leveraged loans at a time of rising bankruptcies.
In this week’s note, we discuss the latest news on US infection trends and reopening plans, Remdesivir trial results and whether US fiscal stimulus is “enough”.
Lockdown relaxation and economic reawakening…are we there yet?
In this week's note, we take a close look at country and regional virus data, and examine the pitfalls of over-extrapolating trends that often reverse.
After the equity rally, P/E multiples are back at around 16x 2021 consensus earnings.
Virus trends and head-fakes, convalescent plasma and U.S. vs. China lockdowns.
There are things the government can try and fix during a pandemic and other things which it can't.
There are some difficult days ahead as quarantines and lockdowns grow. I want to share something with you from John Stuart Mill as we head into the unknown.
Michael Cembalest, Chairman of Market and Investment Strategy, has compiled his extensive research on coronavirus.
A lot of data is being made available on the coronavirus, but most of it requires careful analysis before drawing conclusions.
Confounding almost every forecast we saw last week, Senator Biden appears to have emerged from Super Tuesday with a sizeable delegate lead. Why might the night have turned out so differently from what was expected just a few days ago?
A Coronavirus update: severity, consequences and implications for investors.
Answers to questions on the coronavirus, US megacap stocks, the cost of Democratic Healthcare plans, the Iowa caucus and the problem with the student loan system.
Consensus reactions to the Phase I US-China deal are very skeptical, but may be missing the broader point. A brief note on what happened, and the alternatives.
After a very positive year for investors in 2019, we expect lower positive returns on financial assets in 2020 as some Ghosts of Christmas Past reappear.
How a discussion about China and Hong Kong morphed into a chart war about Trump, Hoover, Taft, Rachel Maddow and Anderson Cooper.
While recessions and bear markets are a fact of life, something peculiar happened after the Global Financial Crisis: the rise of the Armageddonists.
A close look at the Progressive Agenda, China’s deteriorating welcome mat in DC and US Tech IPOs.
Michael Cembalest analyzes the performance of over 6,700 domestic and international active equity managers and discusses the challenges they face.
A brief comment on a proposal from leading Presidential candidates to ban hydraulic fracturing everywhere, immediately.
It was a long, hot summer at the Heritage Foundation. An update from the front lines of the Trade War.
The food fight between the President and the Fed Chair could result in too much easing, and the expansion of valuations beyond sustainable levels.
Michael went on a search for Democratic Socialism in the real world, and ended up halfway around the globe from where he began.
Michael discusses how he should have taken Trump at his word on tariffs, and the impact of the widening trade war on global growth and equity markets as proposed tariffs approach pre-war levels.
The US-China trade war, prescription drug price legislation and the 2020 election.
Topics: unattainable objectives of the Green New Deal; overview of the world’s decarbonization challenges; Germany’s energy transition; Trump’s War on Science.
This paper, written by Tai Hui, discusses the recent rise in government bond yields on the back of market expectations of economic recovery in the U.S., upcoming fiscal stimulus and the prospects of high inflation, as well as its implications for different asset classes.
The challenge of low government bond yields means investors must rethink the 60:40 stock:bond allocation. Discover where they can turn for diversification.
This paper, written by Chaoping Zhu, discusses the potential path for China’s policy normalization after the country’s economy recovered from COVID-19.
This paper, written by David M. Lebovitz and Ian Hui, discusses our views on the U.S. 4Q20 earnings season so far and its investment implications.
Solving for Fixed Income explores how the current environment has affected fixed income's traditional role and the many other opportunities that can accomplish its traditional objectives.
The key to successful investing isn’t predicting the future, it’s learning from the past and understanding the present. We present time-tested strategies.
This paper, written by Tai Hui, addresses the reason behind and our view regarding the latest market volatility and its investment implications.
This paper, written by Tai Hui, discusses the implications of newly-elected President Biden's policies, such as those regarding COVID-19 and China.
Joe Biden’s presidency is expected to bring increased momentum on tackling climate change. Carbon intensity is likely to become an increasingly important metric in investment decisions.
This paper, written by Chaoping Zhu, discusses the outlook on China following its recent economic data releases and fresh outbreak of COVID-19 infections.
It is hard to remember a time when Brexit was not dominating British headlines, but at the midnight hour, UK and EU negotiators finally reached agreement on a new trade deal. This piece addresses the key questions surrounding the deal: what is covered, how does it impact the outlook for the UK economy, and what are the market implications?
This paper, written by Tai Hui, discusses the implications of rising Treasury yields on inflation, the U.S. dollar and overall economic recovery.
This paper, written by Tai Hui, discusses the key market risks heading into 2021.
This paper, written by Ian Hui and Alex Cheung, analyzes the recovery of various Asian economies from the COVID-19 pandemic and discusses the near-term and longer-term regional outlook.
This paper, written by Tai Hui, discusses the outlook on central bank policies to address inflation concerns heading into 2021.
2020 has been an exceptional year, largely due to the onset of COVID-19 and the global economic fallout from the pandemic. This paper addresses nine questions that are most concerned by our clients regarding 2021 outlook for such an unusual economic and policy environment.
This paper, written by Marcella Chow and Chaoping Zhu, discusses the outlook on capital markets following a rise in Chinese bond defaults.
This paper, written by Kerry Craig, discusses the ending of various Federal Reserve credit facilities in a time of lower fiscal support and weaker economic activity.
Thsi paper, written by Ian Hui and Alex Cheung, analyzes the 3Q 2020 U.S. earnings results and the outlook for the COVID-19 pandemic.
This paper, written by Dr. David Kelly and Meera Pandit, provides the latest update on the U.S. presidential election and its investment implications.
This paper, written by Vincent Juvyns, looks at how investors can manage climate-related risks in their portfolios, while also driving real change.
This paper, written by Tai Hui, discusses the recent rebound in COVID-19 cases and their implications on global markets.
This paper, written by Chaoping Zhu, addresses the latest Chinese GDP data and recovering economy with its investment implications.
Turbulence defines today’s investment environment, with great waves of uncertainty surging from the pandemic, the election, fiscal policy and a slowdown in what had been, to this point, a sharp recovery from a very deep recession. The waves of uncertainty should fade in 2021 and, as they do so, the primary role of interest rates in determining asset class returns should reassert itself.
This paper, written by Tai Hui, discusses the outlook on the Chinese yuan following its recent strong performance.
This paper, written by Alex Cheung and Ian Hui, discusses the outlook on the Chinese fixed income market following FTSE Russell’s decision to include China in its World Government Bond Index.
This paper, written by Chaoping Zhu, gives our prospects about China’s upcoming 14th five-year plan. To be approved in October and implemented during 2021 to 2025, this plan will have profound impacts to Chinese economy and financial market.
This paper, written by Tai Hui and Chaoping Zhu, discusses the outlook on China following recent economic data releases.
This paper, written by Tai Hui, discusses the positive outlook on global equities despite high valuations.
This paper, written by Kerry Craig, discusses the longer-term outlook for equities following the recent sell-off of tech and growth stocks.
All the analysis investors need as America selects its next president
This paper, written by Tai Hui, discusses the recent statement by the Federal Reserve and its implications on global markets.
This paper, written by Tai Hui, analyzes the recent discussion between the U.S. and China regarding the Phase One trade agreement.
Asymmetry between losses and gains is actually a very powerful bias that influences decision making and how people invest and allocate in markets.
Top questions on Asian economic and financial market developments
Last week, we learned that the unemployment rate fell to 10.2% in July.
This paper, written by Gabriela Santos, discusses the outlook for U.S.-China tensions amidst COVID-19 and the upcoming election season.
Notes on the week ahead from Dr. David Kelly, Chief Global Strategist
This paper, written by Ian Hui and Alex Yeo, provides a framework for comparing the policy responses and risks faced by Asian economies from the pandemic.
This paper, written by Tai Hui, analyzes the S&P 500 earnings reports and forecasts and their implications on the recovery from the effects of COVID-19.
We revisit asset allocation views as the global economy appears to be in the early innings of recovery, but stares down the limitations to growth in a pre-vaccine world.
This paper, written by Tai Hui, examines the recent decline of the U.S. dollar and its implications on global markets.
A number of countries have seen a pick-up in new infections in recent weeks. Instead of derailing the global economy and forcing another dip in economic activities, the latest outbreaks are more likely to dampen and delay the global economy making a full recovery.
Equity markets have rebounded quickly from their March lows on the back of the unprecedented fiscal and monetary policy response. Although technology and healthcare are holding up relatively well compared to the more cyclical parts of the equity market, 2Q2020 should mark a low point for earnings.
This paper examines the economic outlook following the recent Federal Open Market Comittee meeting.
Central banks are printing money and governments are showering it round the economy. Government debts levels are eye-wateringly high. It's no wonder investors are questioning whether a resurgence in inflation is on the cards.
After four days of negotiations the European Union (EU) council has come to an agreement on a EUR 1,074 billion Multiannual Financial Framework and a EUR 750 billion Next Generation EU recovery fund.
This paper, written by Marcella Chow and Chaoping Zhu, discusses the rebound in Chinese economic activity and its implications for investors.
The size of the U.S. Federal Reserve’s (Fed) balance sheet has started to shrink in recent weeks. Its balance sheet has declined 2.9%, or USD 210billion (bn), from its peak of USD 7.17trillion (tn) in June. Some investors are worried that the Fed is now intentionally dialing back its liquidity support and what the implication of this may be for markets.
The spread of the coronavirus and its impact on global economic activity has materially changed the investment outlook for 2020. In this piece we provide a framework for tracking infection rates globally and monitoring the impact on economic activity.
A consequence of the COVID-19 pandemic is that developed market central banks have pushed policy rates to zero, while engaging in asset purchases to keep bond yields low.
This paper, written by Kerry Craig, discusses the improving market sentiment and the outlook on equities.
This paper, written by Tai Hui, provides an update on fixed income investment opportunities.
This paper, written by Chaoping Zhu, provides a preview of China’s expected economic policies ahead of the National People’s Congress.
With growth stocks continuing to outperform value stocks in this recession, Global Market Strategist Michael Bell looks at why growth has been so dominant and whether it can continue to outperform value.
This paper, written by Tai Hui, provides an analysis of the potential long-term investment implications from COVID-19.
Investors are keenly monitoring the number of new infections around the world to gauge whether the COVID-19 outbreak is under control.
This paper, written by Chaoping Zhu, discussed the performance and outlook of Chinese economy, policies amid the global pandemic and implication for investors.
Spreads on emerging market (EM) bond yields have widened to levels not seen since the global financial crisis as concerns grow about the size of the economic downturn.
Oil prices collapsed in early March due to the price war between the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and Russia
As governments around the world step up their fiscal packages to counter the economic fallout from the COVID-19 outbreak, the Chinese government is also following the same path.
Initial claims for unemployment insurance surged to the highest level ever: 3,283,000, spiking from a slightly revised 282,000 last week.
This paper, written by Dr. David Kelly, reviews the U.S> relief bill and its investment implications.
The U.S. Federal Reserve (Fed) has pulled out its alphabet bazooka in an effort to ensure sufficient liquidity and the smooth functioning of financial markets, while also providing credit to businesses that are affected by the spread of COVID-19 and the stall in global economic activity.
In the past two weeks, the traditional negative correlation between equities and government bonds has broken down.
The U.S. Federal Reserve (Fed) opted for another surprise rate cut this morning (March 16, Asia time), instead of waiting for the March 17-18 Federal Open Market Committee meeting.
It is important to avoid trying to predict the future; rather, clients are best served by monitoring the present situation and maintaining composure.
Worries about the spread of the COVID-19 virus continued to grip markets this week.
This paper, written by Kerry Craig, examines the investment implications from the latest rates cut announcement by the Reserve Bank of Australia in March and COVID-19 outbreak.
This paper, written by Tai Hui and Kerry Craig, addresses the latest equity markets’ correction and its investment implications.
The good news is that the number of new confirmed COVID-19 cases in China is coming down and that more people are now recovering than getting infected.
The U.S. Federal Reserve (Fed) has become a dominant player in the bond market through successive rounds of quantitative easing (QE).February 19, 2020
The economic fallout from the Coronavirus outbreak is expected to become more significant for the rest of Asia in the weeks ahead.
China will also need to start addressing the economic fallout soon, as businesses face significant pressure from disruption to consumption.
Policymakers on both sides of the Pacific have emphasized that they view their work as incomplete and that several issues remain un-addressed.
The U.S. and Chinese governments gave markets an early Christmas present when they agreed to a partial trade deal. However, much will depend on the details.
With over 30 years of demonstrated results, we rely on the same credit process that brought us through the economic downturn of 2008. Watch Jimmie Irby, Global Head of Risk and Credit Administration as he describes J.P. Morgan’s risk process.