The FOMC unanimously decided to make no changes to the 5.25%-5.50% federal funds target range. Interest on reserve balances (IORB) and the overnight reverse repurchase agreement (RRP) rate were also left unchanged at 5.40% and 5.30%, respectively
The rise in interest rates over the last two years has been dramatic. UK interest rates have risen at the sharpest pace since the 1980s, while rates in Europe have rapidly increased from negative territory to the highest level since the inception of the euro. Evidently, this sharp rise in rates is good news for corporate treasurers.
At its September 2023 meeting, the Monetary Policy Committee (MPC) maintained Bank Rate at 5.25% in a split 5-4 decision, while unanimously deciding to reduce the stock of UK government bond purchases by £100 billion over the next twelve months.
At its monetary policy meeting on 14 September 2023, the European Central Bank (ECB) tightened monetary policy further, increasing key interest rates by 25 basis points (bps).
For the past three decades, the property sector has been a key driver of Chinese economic growth. While the recent property downturn in China has created challenges for the banks’ operating environment, the banks’ credit profiles likely remain resilient in the future.
On 14 September 2023, the People’s Bank of China (PBoC) announced a broad based 25bps Reserve Requirement Ratio (RRR) rate cut. The timing and the shortness of the notice period was unexpected.
At Governor Lowe’s last monetary policy meeting as head of the RBA, the bank decided to leave the Overnight Cash Rate unchanged at 4.10%. This was widely expected by economists following slightly softer economic data and a recent decline in monthly inflation.
On 15 August 2023, the People’s Bank of China cut its 1-year Medium Term Lending Facility by 0.15% to 2.50% and its 7-day open market operation repo rate by 10bps to 1.80%.
On August 1, 2023 Fitch downgraded the United States of America’s long-term credit rating one notch, from AAA to AA+.
The Bank of England (BoE) opted to raise Bank Rate by 25 basis points (bps) to 5.25%, as a recent cooling in both inflation and the economic outlook allowed it to moderate the magnitude of its hike from the 50bps delivered in June.
At its monetary policy meeting on 1 August 2023, the Reserve Bank of Australia decided to leave the Overnight Cash Rate unchanged for a second month. This follows a cumulative 400bps of rate hikes over the previous fifteen months, which has taken base rates to a decade high of 4.10%.
At its monetary policy meeting on 27 July 2023, the European Central Bank (ECB) tightened monetary policy further, increasing key interest rates by 25 basis points (bps).
The Federal Open Market Committee (FOMC) unanimously voted to raise interest rates 25bps. The new target range is 5.25%-5.50%—the highest level in more than 22 years—yet we may not have reached the peak.
On 20 July 2023, the European Commission published its report to the Council and the European Parliament on the adequacy of the European Union Money Market Fund Regulation.
On 12 July 2023, the US Securities and Exchange Commission (SEC) announced amendments to its rules governing money market funds (MMFs). The new rules will lead to changes for US domiciled MMFs, as well as specific changes impacting institutional (prime and tax exempt) MMFs, and government, Treasury and retail MMFs.
At its monetary policy meeting on the 4th of July, the Reserve Bank of Australia left the overnight cash rate unchanged at 4.10%. This represents the second pause in the central bank’s current hiking cycle.
The Bank of England (BoE) raised Bank Rate by 50 basis points (bps) to 5.00% as recent upside in data indicated more persistent inflationary pressures and justified a 13th consecutive increase.
The FOMC kept the target range for the federal funds rate at 5.00%-5.25%. The interest rate on reserve balances (IORB) and the overnight reverse repurchase agreement (RRP) rate were also left unchanged at 5.15% and 5.05%, respectively.
At its 15 June 2023 monetary policy meeting, the ECB increased all three key interest rates by 25bps, bringing the refinancing rate to 4.00%, the marginal lending facility to 4.25% and the deposit facility rate to 3.50%.
In a widely anticipated move, the Peoples Bank of China cut its 1-year Medium-Term Lending Facility by 10bps to 2.65% on the 15th of June. The action follows a 7-day Repo cut and a Standing Lending Facility rate cut last week and highlights the central bank’s decisively dovish pivot as the authorities seek to stabilize China’s faltering economic recovery.
At its 13th June Open Market Operation, the People’s Bank of China (PBoC) cut its 7-day Reverse Repo Rate by 10bps to 1.90%. The repo rate is a key tool used by the central bank to ensure adequate market liquidity, this also represents the first repo rate cut since August 2022.
At its 6 of June Monetary Policy Meeting the Reserve Bank of Australia (RBA) raised its Overnight Cash Rate (OCR) by 25bps to a new cycle high of 4.10%. The rate hike surprised investors, who were expecting additional rate hikes following the RBA’s hawkish pivot at its May Monetary Policy Committee (MPC) meeting but remained uncertain as to the exact timing of any RBA action.
Since February this year, the Hong Kong Dollar (HK$) has hit the weak side of its convertibility versus the US Dollar (US$) on multiple occasions. This has necessitated ongoing foreign exchange intervention by the Hong Kong Monetary Authority (HKMA) to support the HK$.
The Bank of England (BoE) raised the Bank Rate by 25 basis points (bps) to 4.50% in a split 7-2 vote as the Monetary Policy Committee (MPC) believes persistent inflationary pressures and a tight labour market justified a twelfth consecutive increase.
At its 4th of May monetary policy meeting, the ECB increased all three key interest rates by 25bps, bringing the refinancing rate to 3.75%, the marginal lending facility to 4.00% and the deposit facility rate to 3.25%.
The U.S. federal government reached its debt limit - Commonly called the “debt ceiling”, the debt limit is the maximum amount of debt that the U.S. Department of the Treasury can issue to the public or to other federal agencies.
At its monetary policy meeting on May 3, the Reserve Bank of Australia (RBA) surprised the market by hiking its Overnight Cash Rate by 25bps to 3.85%. Justifying its abrupt volte-face, the central bank said “inflation… is still too high and it will be some time yet before it is back in the target range”.
Following its semi-annual monetary policy meeting on April 14, the Monetary Authority of Singapore (MAS) left its prevailing monetary policy unchanged – including the slope, width and center-point of the band – unchanged. This represents the central bank’s first pause since it began tightening its policy in October 2021.
On 4 April, the Reserve bank of Australia (RBA) decided to leave the Overnight Cash Rate unchanged at 3.60%. This represents the first pause by a major central bank and follows a cumulative 350bps of hikes over the past ten consecutive meetings.
The FOMC maintained its firm stance against inflation by raising interest rates 25bps to 4.75%-5.00%, despite heightened financial stability risk. Interest on reserve balances (IORB) and the overnight reverse repo rate (RRP) were also increased by equivalent amounts to 4.9% and 4.8%, respectively.
At its March 2023 meeting, the Monetary Policy Committee (MPC) raised the Bank Rate by 25bps to 4.25%, the highest level since November 2008. The increase was largely expected by the market despite recent global financial market volatility.
On Friday 17th March, the People’s Bank of China (PBOC) announced a broad-based 25bps Reserve Requirement Ratio (RRR) rate cut, releasing additional liquidity into the banking system and reducing commercial bank funding costs.
The European Central Bank (ECB) acted on February’s forward guidance by increasing key interest rates by 50 basis points (bps), despite current market volatility.
At its monetary policy meeting on the 7th of March, the Reserve Bank of Australia (RBA) hiked its Overnight Cash Rate by 25bps to an eleven-year high of 3.60%. The rate hike was widely anticipated following last month’s hawkish pivot.
The HKMA intervened to defend the peg and purchased HKD 19bn on February 14-15. This has reduced its aggregate balance to HKD 77bn, the lowest level in almost three years.
At its first monetary policy meeting of 2023, the Reserve Bank of Australia (RBA) raised its Overnight Cash Rate by 25bps to 3.35%. The move represents the ninth consecutive hike in the current cycle, and the accompanying statement was more hawkish than expected.
The European Central Bank raised its key interest rates by 50 basis points, in line with expectations to a 15-year high of 3.00%. In the accompanying statement and subsequent press conference, the ECB maintained its hawkish tone, signalled an intention to increase rates by a further 50 bps in March.
The Bank of England raised the Bank Rate by 50 basis points to 4.00% in a split 7-2 vote as a tight labour market and continued domestic wage and price pressures justified a tenth consecutive increase.
To prevent the United States from defaulting on its payment obligations, the Treasury will now be forced to utilize its cash balances and take steps towards “extraordinary measures.”
At its 14 December monetary policy meeting, the Bank of England voted to raise the Bank Rate by 50bps to 3.50%, bringing borrowing costs to their highest level since 2008.
At its last monetary policy meeting of 2022, the ECB increased all key interest rates by 50 bps, bringing the refinancing rate to 2.50%, the marginal lending facility to 2.75% and the deposit facility rate to 2.00%. This rate hike was a step down from the 75-bps increases of the previous two meetings.
The FOMC unanimously decided to downshift to a smaller but, in the words of Fed Chairman Jerome Powell, “still historically large increase” of 50 bps.
At their final monetary policy meeting of 2022, the Reserve Bank of Australia raised its Overnight Cash Rate by 25bps to a decade high of 3.10%.
On Friday 25 November, the People’s Bank of China announced a 25bps Reserve Requirement Ratio cut. In the accompanying statement, the PBoC confirmed the RRR cut was part of a package of measures to support economic growth.
After a series of jumbo rate hikes, it appears most investors are anticipating a pivot from the US Federal Reserve. However, the elevated level of inflation and resilience of the economy mean that rate cuts are unlikely for some time.
At its 3 November monetary policy meeting, the BoE finally joined the 75bps rate hike club, increasing the base rate to 3.00%, the highest level in almost 14 years. Over the past 11 months, the central bank has pushed the base rate up by 290bps – the fastest pace on record – driven by a combination of elevated inflation, a tight employment market and the potential for this to lead to more persistent inflation, and the recent fiscal support for household energy bills.
The FOMC showed once again that it is prepared to take interest rates into sufficiently restrictive territory in order to clamp down on inflation. For the fourth consecutive meeting, it unanimously decided to increase its Federal Funds target rate by 75bps to a range of 3.75%-4.00%. Interest on reserve balances (IORB) and the overnight RRP were also increased by equivalent amounts to 3.80% and 3.90%, respectively.
At its 27 October policy meeting, the ECB’s Governing Council voted to raise key eurozone interest rates by 75bps, in-line with market expectations. The deposit rate increased to 1.50%, the marginal lending facility to 2.25% and the main refinancing rate to 2.00%. The central bank’s rationale for a third large rate hike was the recognition that inflation remains “far too high”.
At its monetary policy meeting on 1 November, the RBA raised the Overnight Cash Rate by 25bps to 2.85%. This was the seventh hike in the current cycle, taking base rates to a nine-year high.
At its semi-annual monetary policy meeting on 14 October, the MAS re-centered the mid-point of the S$NEER up to its prevailing level – approximately a 2% increase – while keeping the slope and width of the policy band unchanged.
The Bank of England raised the Bank Rate by 50 basis points to 2.25% in a split 5-3-1 vote as the tight labour market, higher wages and higher domestic inflation justified a seventh consecutive hike.
On August 15, the People’s Bank of China announced a MLF rate cut of 10bps to 2.75%. Although small in size, the rate cut confirms the PBOC’s desire to jump-start the economy and sends an important monetary policy signal with significant implications for interest rates and RMB cash investors.
In a near-consensus 8-1 vote, the Bank of England (BoE) Monetary Policy Committee (MPC) raised the Bank Rate by 50 basis points (bps) to 1.75%, the highest level in over 13 years as domestic cost and price pressures intensify.
On July 27, the Federal Open Market Committee (FOMC) raised its Federal Funds Rate target range by 75 basis points (bps) to 2.25% - 2.50%. There were no dissenters.
On July 14, the MAS announced it would tighten monetary policy by re-centering the S$NEER policy band upwards. While the timing of the MAS statement was a surprise, the market was expecting further policy actions.
On June 7, the RBA surprised the market by raising the Overnight Cash Rate by 50bps to 0.85%. This is the second rate hike in the current cycle, following a 25bps move in early May. The size of the rate hike also affirms the RBA’s desire to get ahead of the inflation fighting curve.
The RBA hiked its Overnight Cash Rate for the first time in over a decade at its 3rd May monetary policy meeting. The hike was more hawkish than expected.
At its monetary policy meeting on Tuesday 5th of April, the RBA left base rates unchanged at a record low of 0.1% whilst acknowledged that “inflation has picked up and a further increase is expected” in the accompanying comments. Its hawkish tilt and giving a clear hint to potential rate rises in the coming months.
On 15-16 March, the Federal Open Market Committee (FOMC) held its two-day meeting and raised its federal funds rate target range by 25 basis points (bps) to 0.25%-0.5%, with one dissenting member calling for a 50bps increase.
The Bank of England (BoE) raised the Bank Rate by 25 basis points (bps) to 0.75% in a split 8-1 vote with the dissenting Monetary Policy Committee (MPC) member calling for no change on 17 March 2022.
At their first monetary policy meeting of 2022, the RBA acknowledged that the economy “remains resilient” despite the recent Omicron outbreak which has not derailed the recovery.
Singapore’s de-facto central bank hiked the slope of the S$NEER policy band, increasing the pace of appreciation. The unexpected hike was triggered by the strong inflation uptrend in recent days as well as a reassessment of Singapore’s growth and inflation expectations in 2022 by the MAS.
The Bank of England (BoE) defied market expectations for a rate hike as they left the Bank Rate unchanged at 0.1% and maintained total target of asset purchases at GBP 895 billion. The deferred hike means no immediate respite to ultra-low sterling yields, although further interest rate volatility is likely; investors should consider maintaining a disciplined approach to cash investment and segmentation.
The RBA announced its first tentative step towards tapering and eventual policy normalization.
A likely pause in the US hiking cycle is now approaching. See how the peak in rates has impacted equity and bond markets in the past.
The J.P. Morgan Guide to the Markets illustrates a comprehensive array of market and economic histories, trends and statistics through clear charts and graphs.
Read about the complex issues at the heart of measuring the financial impact of ESG investing.
This paper, written by Tai Hui and Tilmann Galler, discusses the outlook for India equities and the investment implications.
Europe has made structural improvements and we think investors should sit up and take notice.
Global Market Strategists Meera Pandit and Max McKechnie explain the implications of a potential failure of US debt ceiling negotiations.
Accelerating efforts to achieve a green and secure energy supply are having an impact on the economy and markets.
Explore how dividend paying stocks can help build portfolio resilience against the prospects of high inflation and recession.
Amid ongoing market volatility, the Market Insights team answers the key questions raised by the recent stress in the US and European banking sectors.
Green bonds are attractive instruments for working towards positive environmental benefits. Find out why demand for green bonds from investors is expected to continue to grow.
This paper discusses the outlook for the Chinese economy with an update on latest GDP number and the COVID-19 situation.
Learn whether rising interest rates could cause a housing market crash and what it means for consumers.
Read our weekly commentaries to get market insights that may help inform your investment strategy.
With markets and economies both proving resilient so far this year, our global economic outlook highlights the investment opportunities and risks ahead. Explore now.
Governments are aligning behind the goal of achieving net zero emissions by 2050, but dramatic changes to the global economy will be required to get us there. Learn more about the policies and innovations that could pave the way to a carbon-neutral world.
A forced and rapid energy transition is under way. Discover what impact this will have on commodity markets and clean energy investment opportunities.
Explore Eye on the Market, timely commentary that offers views on the economy, markets, and investment portfolios by Michael Cembalest.
Emerging market external debt has been out of favour with investors throughout 2023. We explore whether yields of 8.6% may finally tempt them to get back in.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
Fixed Income Perspectives
Using rating transition matrices to formulate a view on expected solvency-related capital charges in corporate bond portfolios
Despite short-term volatility, bond markets still offer compelling opportunity
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
The Fed is driving the bus toward higher for longer, while the market continues to probe from the back seat. We explore three paths that rates can take from here.
Recently, China’s local government made headlines on the implicit debt issue, but we believe the issue is manageable and that systemic risk is unlikely.
We analyze forward-looking rating transition matrices in US Corporate Credit markets and lay out how they can be informative when making investment decisions.
We focus on the information contained in the rating transition probabilities within the BBB/BBB- and BB/BB+ rating cohorts with a view to identifying potential fallen angels and rising stars.
The expiry of the student loan payment moratorium represents a meaningful shock to certain borrowers’ finances. We sought to identify exactly which consumers are most impacted and quantify the impact to their finances.
Using history as a road map should lead investors to embrace high quality fixed income rather than shying away from it in favor of the cash trap. This is especially true as the end of the Fed’s hiking cycle is on the horizon and yield curves are highly inverted.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
The rate by which U.S. colleges and universities discount student tuition continued to rise in the 2022-2023 academic year, contributing to our negative view on the higher education sector.
As the largest holder of US leveraged Loans, Collateralized Loan Obligations (CLOs) are in focus given the current macroeconomic context. We introduce a quantitative and qualitative framework for analyzing and differentiating CLO managers we invest in.
China's property market, once galactic in scale, has shrunk considerably. Will it follow Japan’s path and enter a lost decade? We think not, but volatility will persist.
In this blog, we explore why Chinese authorities are guiding down household investment return and why this guidance could anchor CGB yields in the medium term.
This blog presents a framework for constructing rating transition scores to predict composite bond rating events. The approach capitalises on momentum in bond ratings, published rating agency credit watch flags and the replication of index composite rating methodologies.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
After the strong China Q1 GDP reading, we noted a view difference between onshore and offshore markets. In this Blog, we highlight the potential reasons for why the onshore market holds a more cautious view than the offshore market.
The Federal Reserve are currently priced to cut rates over the next two years with little feedthrough to the other major central banks. This blog investigates the divergent trends in the US and the rest of developed markets and tackles the question of whether the Fed can pause and subsequently cut rates without dragging the rest of the world with them.
The stakes are raised as the Fed approaches the end of the hiking cycle. Making the case that the time to pause is now.
In the blog, we provide the key takeaways from NPC meetings on the Government Work Report, personnel change, and institutional reform.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
With volatility surging again, we look at the recent performance of fixed income sectors and discuss the potential drivers going forward. Can Agency MBS go from a bracket buster to a Cinderella story?
The US consumer remains dynamic as the economic landscape rapidly evolves. Read about our latest consumer insights powered by alternative data, which help demystify the drivers behind recent ABS performance.
An important part of our long-term investment strategy is actively engaging with issuers on financially material ESG issues. Read about my recent engagement meeting with PEMEX.
The factors that led to US dollar appreciation in 2022 are inflecting. We examine what this changing trend means for the future of currency markets.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
What if inflation was transitory all along? Exploring the growing case that the Fed has made sufficient progress and tightened enough.
2022 was a rocky year for bond investors, but there is cause for cautious optimism in 2023.
With the U.S. Federal Reserve continuing to tighten and recession risks rising, we assess the financial state of U.S. debtors from state and local finances to corporates and consumers. We conclude that governments, corporations, and consumers are well-positioned in 2023.
Every December, we try to come up with predictions for the New Year. We believe these predictions have at least a one in three probability of materializing – making them realistic while not necessarily our base case. We also judge that they are not currently priced in the markets – making them surprises relative to investor positioning.
Resilient fundamentals defined 2022. What should we expect in 2023?
The global economy continues to face macroeconomic headwinds and growing recession risks from tightening financial conditions. In this blog, we analyze a relative value approach to fallen angels.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
Volatility throughout 2022 has sharpened the focus of commentators and participants alike on market liquidity. In this blog, we start to unpack this evasive concept with an eye towards US Treasuries.
The Fed’s balance sheet journey has only just begun. They have successfully increased the cost of money but are only just beginning to reduce the supply.
The Communist Party of China (CPC) concluded its 20th National Congress on the 22nd of October, marking the end of an old term and the start of a new term.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
The Fed’s view that inflation would be transitory has turned into a horror movie. We flag several risks that suggest the Fed might now be making more progress than it thinks.
Our quantitative indicators continue to signal the dollar is overvalued. We believe that the prospects of valuation based strategies are becoming more attractive for investors with a sufficiently long time horizon.
While fundamentals will likely weaken as monetary conditions tighten, we continue to believe that our investment universe of investment-grade and high-yield credits are well-positioned to weather the storm.
Portfolio Manager James McNerny discusses the Fed hiking cycle and identifies opportunities on the short end of the curve
What does 2022 have in store for fixed income markets? Read on as Bob Michele & Kelsey Berro shares 5 realistic predictions for the New Year.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
Bob Michele, the global Chief Investment Officer of Global Fixed Income, Currency & Commodities group, discusses the extraordinary monetary and fiscal response to COVID-19 across the world.
The agency CMBS market offers an attractive way for fixed income investors to access one of the more resilient sectors of the commercial real estate market.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Back by popular demand, we present Bob Michele's annual "Bond Market Awards" - including central banker of the year, villain in a leading role, rookie of the year, MVP, bond of the year and more!
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
The ‘Blue wave’ the market had prepared for now appears to be more of a ‘Blue ripple’ and currency markets are adjusting to a different political outlook.
Emerging Markets Local Currency debt emerged as one of our best ideas at our most recent investment quarterly meeting. This isn't just about the US Dollar; we like what we see in local EM.
At our recent IQ meeting, we concluded municipal high yield was one of our best ideas. In this piece we take a deep dive into one of the more opportunistic sectors in the tax-exempt market.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
The opportunity cost of not investing in EM debt remains very high. Most importantly the same applies for the rest of fixed income: don’t fight the central banks.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
In response to Europe’s biggest growth shock in a generation the EU council agreed on the outline of the “Recovery Fund” to help cushion the economic fallout from the pandemic.
The global savings glut has been driving asset price valuations for the last decade or so. Emerging Markets and investors need to prepare for a potential new world.
The potential outcomes of the U.S. elections could usher in more than just higher taxes.
Recent headlines have compared today’s CLO market to the subprime mortgage market of old; we do not believe CLOs pose system risks to the financial system.
While China’s post-Covid-19 economic data is showing signs of normalization, the government’s focus on stability will have significant implications for monetary policy and interest rates
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Investors fled emerging markets ahead of the pandemic, but are now slowly returning. We expect a gradual economic recovery to continue to support returns, and seek to rotate into select beta.
Top of mind insights from our Global CIO
Now that the US has entered the beginning stages of the reopening process, we discuss the speed in which the US economy can rebound with a focus on systemically important States and politics.
COVID-19 uncertainties abound. With the help of the team, Andrew tries to tease out a macro view through answering vexing questions.
Next week the Treasury will re-introduce 20-year bond issuance as they look to manage increasing borrowing needs and capitalize on growing demand for long bonds by LDI investors.
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Liquidity provision doesn’t remedy a weak outlook for corporate fundamentals. Thoughtful sector and security selection is needed to navigate the minefield ahead.
We expect bond markets to remain sanguine about the shift to unprecedented monetary financing until there are signs that the economy is emerging from the downturn.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
The bond market isn’t dead, but to deliver a reasonable return we need to balance the safety of co-investment alongside central banks with the opportunistic hunt for higher yield and return.
EM valuations reflect much of the outlook ahead, but the uncertain COVID-19 impact remains a downside risk. As such, we remain defensive, favoring EM investment-grade credit.
With the appearance of COVID-19 and the extreme market sell-off in risky assets, in the space of 3 months investors have aggressively been buying money market funds.
The Peoples Bank of China recent policy actions help address the concerns that its policy response was lagging the aggressive actions taken by other central banks.
The last four weeks have created deep value and at current levels EM IG offers an attractive alternative with less credit risk and the prospect of double-digit returns.
Given the dramatic shift in the global economic outlook as a result of COVID-19, US inflation will slow but the market may be too pessimistic.
As the Coronavirus Aid, Relief, and Economic Security (CARES) Act emerged from on high in the Senate, it became clear to me what this meant for fixed income investors.
As all asset classes have repriced over the past few weeks, the Global High Yield Team believes looking at leveraged credit valuations in the context of historical bear markets can provide actionable insights for investors.
The bond market was broken, but policy makers and market leaders worked around the globe to fix the system.
Market functionality needs to be restored no matter how anyone feels about the methods it may take to get there. If the current market conditions persist, the consequences may be severe.
Volatility across markets has created considerable anxiety amongst investors trying to gauge the effectiveness of global response from healthcare, monetary and fiscal policy. Given how varied the responses are, this may be an unsolvable riddle over the near term
With markets down across the globe, we are writing to tell you that EMD has not delivered a homogenous drawdown. Instead, there has been a resilience in our arena that is worthy of comment.
The Fed’s emergency cut significantly increased the odds of returning to the zero-lower bound in 2020.
We’ve seen Fed rate cuts before, during the 2008 crisis—this one removes a question mark for the economy. Now small businesses also need support.
While no one knows for certain what 2020 or 2022 will bring to the White House and the Fed, staffing changes and increasing political pressure within the Fed is a near-certainty.
After a challenging 2018, fixed income investors caught a break in 2019 with the U.S. Barclays Aggregate returning 8.7%, its best year since 2002.
The Singapore Dollar is no longer defying gravity – we discuss why and the implications for cash investors.
We assess the key macro risks investors should be thinking about in 2020 and their potential impact on global bond portfolios.
With the ECB quickly running out of tools and inflation still some way from their current target, the market will be keen to hear what comes next.
Bubble alert? Not so fast, mortgage credit availability has slowly emerged from extinction. Read our insights on the current evolution of the mortgage market.
The taxable municipal market is expected to see a spike in supply and more diversified issuance. We explore the potential opportunity for investors.
Our team puts forth predictions around fixed income market returns, Treasury yields, gold and the U.S. presidential elections.
We present our bond market awards for 2019 - including central banker of the year, villain in a leading role, rookie of the year, MVP, lifetime achievement award and more.
We look at why the People’s Bank of China’s (PBoC) made its recent and notable dovish pivot and its implications for investors
Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
In our view, emerging markets debt deserves the positive attention it has been receiving in an era of central bank interference and global hunt for yield.
We think the Fed’s actions have assuaged some concerns about short-term funding but risks still remain.
When constantly watching financial markets and following the 24-7 news flow, it can be easy to get caught up in the trees and miss the forest.
Chinese property is one of the largest sectors in the Asia high yield bond universe, and is often considered as one of the “safer” sectors by investors.
Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.
Clients look to income focused strategies to meet their objectives, but traditional metrics of risk may not be appropriate for income focused strategies.
Record low bond yields pose a major problem for fixed income investors. We explore why taking active FX risk can be a solution for investors.
The Reserve Bank of Australia cut its overnight rate to a new record low - leaving the RBA in uncharted territory.
It seems the global financial system has gone crazy as rates continue to fall further negative. We review why and the impacts it has on the market.
I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.
In a world where real yield is increasingly scarce, it is our view, emerging markets debt deserves a larger role in a global fixed income portfolio.
We analyze which economic indicators the Fed should pay attention to and which ones are false alarms.
ECB governors are agreement that it's time for fiscal policy to now take the baton from monetary policy as the main instrument to stimulate the economy.
We review July's ECB monetary policy and determine the impacts on the ECB and the Eurozone.
Why is the stock market at near all-time highs, while the bond market is signaling recession?
Even as markets price in recession risk, we look at how the technicals in the high yield market is as important as solid fundamentals in the short term.
EM Central Banks have a relatively high beta to Fed policy rates. We believe EM Central Banks will deliver a significant cutting cycle across most countries.
Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.
The central banks must take the lead, and it must start this month. They must bring front end real yields so low, so fast that the yield curve steepens.
If central bankers can engineer another dovish course correction which prolongs the global economic expansion in real terms, it will be a job well done.
We see many different narratives driving markets, and we address the impact of a binary change in the short-term outlook for growth and financial asset prices.
What seemed like unconventional and bizarre monetary policies in the immediate post-crisis world, have come to look generally accepted, if not pedestrian.
President Trump has been presented with the opportunity to make a profound impact on the Federal Reserve.
Why is everyone is talking about Modern Monetary Theory?
The market got a dose of what no-QT feels like, but now in March, the reality of $50 billion per month of liquidity withdrawal is likely to return.
With the benefit of hindsight, we can summarize the past year in markets with a pretty tight fit to almost two complete cycles through the Three Phases.
Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.
We highlight our awards—including corporate bond of the year, currency of the year, comeback player of the year, unsung hero, MVP and more.
According to the roadmap I’ve described all year, a dovish lean into tight financial conditions should be cause for a significant relief rally in risk assets.
We recap macro and policy evolution, and then shoehorn it into the Three Phases Model to get a near-term outlook for further market performance.
Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.
A lot has happened since my last dispatch on the Three Phases Model. I’ll detail where I think we are in its evolution.
We take a in-depth look at the leverage loan market.
The Fed’s interest on excess reserves (IOER) shot to prominence following an unprecedented adjustment by the central bank. We explore its impact on investors.
We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.
Japan suffers from labor shortages and the working population is no longer growing. So how is it possible the economy just added the most number of jobs on record?
We focused on global central banks’ withdrawal of liquidity as the primary market driver. Now, we look more closely at USD liquidity from an offshore perspective.
Realized volatility in all asset prices should continue to be elevated as markets adjust in fits and starts to the new reality of liquidity removal.
We review how the inclusion of China onshore government bonds in the Global Aggregate Index impacts the market.
When an economy reaches full employment, productivity growth must then also occur to lift potential, otherwise inflation pressure builds. Where are we now?
We outline the key risk scenarios for bond portfolios in 2018.
Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.
From bond of the year to most valuable player to comeback player of the year, we've presented our bond market awards for 2017.
We still believe the flow of central bank balance sheet expansion is still the dominant force driving markets, both risk markets as well as interest rates.
Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.
Here we discuss what R-star or the real neutral rate of interest is and how it affects central banks and their ability to determine and explain policy.
We revisit a different structural reform proposal and expand on it with three key charts from the Organization for Economic Co-operation and Development.
Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.
The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?
We examine how anticipated economic momentum over the near term is likely necessary to sustain the narrative, in effect to avoid the decay.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
We share a short note to highlight one fascinating chart that in our view encapsulates the macro narrative thematically all by itself.
The consequences of the Border Tax seem skewed toward a mixture of known and unknown negatives, with what looks to me like only dubious potential benefits.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
Part II of the Border Tax gives an update on the deep policy discussion brewing at the intersection of corporate tax reform and US trade policy.
There is a deep policy discussion brewing at the intersection of corporate tax reform and US trade policy. Here are two important points.
There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.
2023 Long-Term Capital Market Assumptions
The 26th annual edition explores how the legacy of the pandemic – limited economic scarring but enduring policy choices – will affect the next cycle. Despite low return expectations in public markets, we think investors can find ample risk premia to harvest if they are prepared to look beyond traditional asset classes.
Cash strategies
Explore funds across our three strategies to segment short-term investments and leverage solutions across the full ultra-short spectrum.