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Weekly Bond Bulletin: Welcoming volatility

By GFICC Investors
On the surface, several fixed income sectors appear to have seen a correction or perhaps a reversal of a trend. However, looking through the noise shows that the recent market weakness was primarily driven by idiosyncratic events.
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Weekly Bond Bulletin: Drilling down into oil currencies

By GFICC Investors
The recent rally in oil prices has not been accompanied in most cases by stronger oil currencies. In this week’s Bond Bulletin we delve into the main factors driving oil price and currency performance, and look at which currencies appear best positioned in the current environment.
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Weekly Bond Bulletin: Are we at the right dip yet?

By GFICC Investors
Emerging market local currency has been one of our preferred asset classes for some time. Does a recent dip in performance indicate a shift from the positive goldilocks scenario for emerging markets?
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Weekly Bond Bulletin: Risk-on rolls on

By GFICC Investors
The market optimism that followed Donald Trump’s election has returned with the passing of the Senate budget resolution. The strength of markets so far this year, coupled with the usual year-end derisking trend, may suggest that caution is warranted—but signs currently point to a persistence of positive momentum.
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Weekly Bond Bulletin: European showdown: High yield vs. loans

By GFICC Investors
Diverging fundamentals in the European high yield and leveraged loan markets are strengthening the case for high yield, which continues to look attractive despite tight spreads.
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Weekly Bond Bulletin: Inflation Implications

By GFICC Investors
Strong global economic growth and tight labour markets are putting pressure on wages. Are we about to see a pick up in inflation, and if so, what will be the impact on central banks and fixed income markets?
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Weekly Bond Bulletin - Looking beyond the hedges

By GFICC Investors
Rising US interest rates are contributing to a spike in US dollar hedging costs. This presents a challenge for euro and yen investors in particular, but also creates opportunities for active managers given the macro backdrop remains broadly supportive for fixed income assets.
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Weekly Bond Bulletin: Technically speaking

By GFICC Investors
With fundamentals strong and valuations looking more stretched, technicals remain a major driving force for global bond markets.
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Weekly Bond Bulletin: Debating the yield curve

By GFICC Investors
The US Treasury curve has flattened over the course of this year, with the difference between two-year and 10-year yields currently at 0.84% (as of 19 September). As we embark on the process of central bank balance sheet normalisation, we look at whether the yield curve may continue to flatten, as would be expected when rates rise, or if we could begin to see a steepening effect.
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Weekly Bond Bulletin: EM corporates on the up

By GFICC Investors
As emerging market (EM) growth continues, a combination of favourable factors is working to the advantage of the high-yield corporates at the heart of the EM universe.
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Weekly Bond Bulletin: How low can we go?

By GFICC Investors
US Treasuries have rallied across the board and the curve has flattened. Can rates go even lower, or are we set for a rate sell-off?
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Weekly Bond Bulletin: Comparing apples with oranges

By GFICC Investors
US and European high yield bonds have performed well year-to-date, with total returns at 5.90% and 5.09%, respectively (as of 30 August 2017). Despite these strong returns, we believe high yield remains an enticing asset class for investors—though it’s critical to understand the nuances between the US and European markets.
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Weekly Bond Bulletin: Strategies for the dog days

By GFICC Investors
When caught in the doldrums, the only strategy is to wait, and stay alert for changing winds. With most bond indices idling in these dog days of summer, the US investment grade credit market may present a near-term opportunity.  
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Weekly Bond Bulletin: The 4 percent growth club

By GFICC Investors
Economic fundamentals remain robust, with solid growth across G10 economies. Yet markets seem reluctant to price in higher yields. Could we see a hawkish surprise as markets misprice central banks?
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Weekly Bond Bulletin: An eye on the euro

By GFICC Investors
It’s been a quiet summer for fixed income markets, but a different story for currencies. What implications could recent shifts in the euro/dollar exchange rate (EUR/USD) have for central bank policy and corporate earnings?
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Weekly Bond Bulletin: China churns along

By GFICC Investors
With the outlook for the Chinese economy continuing to be a key driver of investor sentiment, we take a look at the latest Chinese data releases and examine the likely impact on global growth and on fixed income markets.
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Weekly Bond Bulletin: Picking up carry in the summer lull

By GFICC Investors
Record low market volatility should be conducive for carry trades, with strong fixed income inflows and an improving economic backdrop providing further support. However, potential risks require close monitoring, particularly in thinner summer trading.
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Weekly Bond Bulletin: Inflation: Global, not local

By GFICC Investors
With spare capacity continuing to accumulate, inflation is set to remain low for some time to come. What does this persistently low inflation environment mean for central bank policy and bond valuations?
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Weekly Bond Bulletin: Credit where it’s due

By GFICC Investors
Investment grade credit is supported by a robust fundamental backdrop, strong investor flows and central bank activity—suggesting tight valuations, for now, are justified.
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Weekly Bond Bulletin: Marking monetary policy to market

By GFICC Investors
Markets have moved in response to a more hawkish tilt in global central bank rhetoric, but is this transitory or a sign of shifting trends? Investors need to decide which is more important for asset markets: monetary policy or the underlying state of the recovery.
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Weekly Bond Bulletin: Hanging on every word

By GFICC Investors
A hawkish market reaction to Mario Draghi’s speech at the European Central Bank’s (ECB’s) summer forum in Sintra resulted in a sell-off in yields, with 10-year Bunds 17 basis points (bps) higher by the close of Tuesday. While the direction of monetary policy will dominate market attention, we take a closer look at events in Italy, where two banks have been allowed to fall into liquidation, and the potential impact that this may have on European credit markets.
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Weekly Bond Bulletin: Liquidity rolls on

By GFICC Investors
The Federal Reserve (Fed) has just announced its plan for reducing the size of its balance sheet, but liquidity remains abundant across the G4 as a whole. Will supportive technicals continue to underpin performance of risk assets?
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Weekly Bond Bulletin: Contemplating commodity weakness

By GFICC Investors
Oil prices remain under pressure from rising supply. What is the likely effect of a bearish outlook for oil on global duration and credit?
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Weekly Bond Bulletin: Technicals take centre stage in Europe

By GFICC Investors
European credit nudges just ahead of US credit in our rankings as scope for continued corporate bond purchases by the European Central Bank provides ongoing technical support to the market.
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Weekly Bond Bulletin: Seeing the EM forest through the trees

By GFICC Investors
Events in Brazil provide the latest reminder that emerging markets remain subject to idiosyncratic risk. But while such events will periodically rock individual markets, we retain conviction on the asset class as a whole.
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Weekly Bond Bulletin: Goldilocks and the market bears

By GFICC Investors
Strong performance year to date has caused some to question whether credit markets are too hot. But with recent data releases pointing to a Goldilocks environment of solid and supportive growth and subdued inflation, we believe conditions, for now, are just right.
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Weekly Bond Bulletin: Fine-tuning credit exposures

By Nick Gartside, Travis Spence, Marika Dysenchuk
Credit spreads have compressed further, reflecting robust corporate fundamentals and a strong growth backdrop. However, with Treasury yields contained by a lack of inflation, value opportunities persist across the corporate landscape.
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Weekly Bond Bulletin: A refuge from financial repression

By Nick Gartside, Travis Spence
European investors have been hard-pressed to find attractive domestic yield opportunities of late, yet the European Central Bank (ECB) remains in no rush to tighten policy and credit spreads show no sign of widening. Emerging market (EM) debt may offer a refuge from the domestic yield drought.
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Weekly Bond Bulletin: High conviction in high quality corporates

By Nick Gartside, Travis Spence
Robust earnings corroborate our conviction in investment grade corporate credit—which is also supported by strong technical factors and justified valuations.
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Weekly Bond Bulletin: Sticking with the short

By Nick Gartside, Travis Spence
Shifting fundamentals are complicating the US monetary policy outlook. Is short duration positioning still warranted?
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Weekly Bond Bulletin: Europe remains easy

By Nick Gartside, Travis Spence
Hawkish interpretations of its recent rhetoric by some market participants prompted the European Central Bank (ECB) to push back and reiterate its dovish guidance. While hawks are encouraged by the bloc’s nascent recovery, the lack of broad-based and sustained inflation should keep tighter policy off the table before 2018.
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Weekly Bond Bulletin: Benefiting from the basis

By Nick Gartside, Travis Spence, Marika Dysenchuk
Fixed income markets have been sanguine in the face of political turbulence over the past quarter. But one significant development has perhaps escaped notice: the material decline in the cost of hedging US assets for Japanese and European investors.
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Weekly Bond Bulletin: The importance of staying local

By Nick Gartside, Travis Spence, Marika Dysenchuk
Emerging market local currency debt has rallied since the beginning of 2017, with most of the move higher driven by the currency exposure. Is there still room to run in this sector?
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Weekly Bond Bulletin: Surveying the sell-off

By Nick Gartside, Travis Spence, Marika Dysenchuk
The decline in oil prices has resulted in a credit market sell-off. Does recent spread widening present a buying opportunity, or should investors be worried about further losses?
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Weekly Bond Bulletin: The curve conundrum

By Nick Gartside, Travis Spence
While the front end of the US rates curve is adjusting to the reality of rates normalisation, 10-year yields have been little changed since their sharp upward adjustment after the US election. Do curve dynamics suggest that markets are losing faith in Trumponomics, or are other forces at play?
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Weekly Bond Bulletin: Fed on the March

By Nick Gartside, Travis Spence, Derek Traynor
Strong data and a shift in rhetoric from policymakers have caused us to reappraise our view on Federal Reserve (Fed) rate rises. We now anticipate an increase of 25 basis points (bps) at the 15 March meeting. What will this mean for bond markets?
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Weekly Bond Bulletin: Dissecting the disconnect—Politics vs. fundamentals

By Nick Gartside, Travis Spence
Political risk across Europe remains elevated. In France, the chance of a Le Pen victory in the presidential elections remains low, but a narrowing in the polls over the last week has caused French spreads to widen vs. Germany, overshadowing otherwise strong fundamentals across the eurozone.
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Weekly Bond Bulletin: Clamoring for credit

By Nick Gartside, Travis Spence
The risk-on rally continues apace, with strong investor flows into credit and emerging market sectors. While Trump’s latest tax pledge has added legs to the rally, the strength of underlying fundamental data remains the critical driver of investor demand.
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Weekly Bond Bulletin: Vanishing volatility - time to hedge?

By Nick Gartside, Travis Spence
Despite the potential for further political noise ahead, market volatility is currently conspicuous by its absence.
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Weekly Bond Bulletin: The dollar dilemma

By Nick Gartside, Travis Spence
A shift in political rhetoric since the presidential election and  stronger overseas growth dynamics have contributed to a pause in the upward march of the US dollar. Monitoring the drivers of the currency will be vital for interest rate and bond market performance calls.
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Weekly Bond Bulletin: Understanding the unexpected emerging market rally

By Nick Gartside, Travis Spence
Contrary to expectations, returns from emerging market debt have been strong since the US election. Although spreads are now at multi-year tights, we believe the rally can run further as real yields remain attractive and the asset class is supported by improving fundamentals and constructive technical factors.
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Weekly Bond Bulletin: The duel of the animal spirits

By Nick Gartside, Travis Spence
Markets are usually driven by either fear or greed, but in the current environment these two animal spirits are both in evidence. How is this dynamic playing out in bond markets—and which mood will take the upper hand?
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Weekly Bond Bulletin: An eye on supply

By Nick Gartside, Travis Spence, Marika Dysenchuk
The robust improvement in growth dynamics that began in the US at the end of last year now appears to have taken hold globally—but government bond yields have barely moved. A look at supply helps us understand why this might be the case.
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Weekly Bond Bulletin: The “January effect” - Why this time may be different

By Bob Michele, Nick Gartside, Travis Spence
The strong trend in economic data suggests that this January may not be as negative for risk assets as recent years, and instead could bring a rise in interest rates. Nevertheless, we do not anticipate a drastic backup in Treasury yields, so long as core inflation remains contained and supportive technical factors persist.
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Weekly Bond Bulletin: Making growth and inflation great again

By Bob Michele, Nick Gartside, Travis Spence
Donald Trump’s US election victory has dramatically altered the outlook for growth and inflation and, ultimately, for global fixed income. Which sectors will feel the pressure—and which stand to benefit?
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Weekly Bond Bulletin: Searching for the European spark

By Bob Michele, Nick Gartside, Travis Spence
Uncertainty around the Italian referendum and the European Central Bank (ECB) meeting served as a reminder that political and policy uncertainty are holding back eurozone assets.
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