In case you missed out on the chance to see Lichtenstein: A Retrospective at the Tate Modern you need look no further than the US bond market for a figurative plane on fire. The better than expected...
April proved to be a positive month for most risk assets. Disappointing global economic data were shrugged off and almost welcomed as likely to prolong central bank largesse. To be fair there were also a number of near term positives...
During the last six years the financial crisis has caused upheaval for governments, financial institutions and households across the world. What is perhaps less well understood is to what extent it has affected...
Across the developed world, non-financial sector debt (government, household, corporate taken together), as a multiple of GDP, has increased substantially over the last several decades. There is a growing belief that...
Political events and central bank activism continued to represent major market drivers in Q1. However, over the last few months weaker economic data out of the eurozone and the UK has led us to lower our growth expectations for...
We did not expect dispersion to pick up to the extent, or with such an aggressive pace, as we have witnessed over the past two months. This environment of increased credit dispersion can present alpha generating opportunities to be both...
Financial markets started the New Year positively following news that the House of Representatives passed a compromise bill extending tax rises only to the wealthiest individuals earning $400,000 or more a year and avoiding cuts in federal programmes ranging from defence through to welfare. The improving sentiment towards the eurozone also...
2012 was a very strong year for credit; especially so for financials. With 2013 also getting off to a reasonably positive start, on a duration hedged basis, it is only natural that our investors are asking whether there will be attractive opportunities, and what will drive volatility over the next year?
Risk premiums widened in European credit markets again for the second consecutive week, albeit only slightly. The iTraxx indices closed marginally wider and in the cash bond market, on balance, core bond spreads were up to...
Last year the European Central Bank (ECB) finally got to grips with the Eurozone sovereign crisis. First, the ECB announced unlimited liquidity infusion (LTROs), but as this provided only temporary relief, it was later superseded by...
A low growth environment in 2013 can be good for credit
Ross A. Pamphilon examines the key economic and political events which have occurred over the last month before reviewing credit market performance and finally discussing ECM’s expectations for performance for the next year.
All on board- getting ready for 2013's busy regulatory agenda
Jens Vanbrabant reviews the reform packages that have resulted from the increased regulatory pressure following the financial crisis of 2008. He continues by analysing the effects on the world's financial system.
Ross A. Pamphilon analyses the fiscal and political challenges faced by Canada in the 1990’s, whilst looking at how these were resolved, he compares the similarities of Canada’s past struggles to those faced by a number of today’s developed economies.
Stephen Zinser reviews the factors contributing to the credit market's solid October performance, before discussing the positioning of ECM's portfolios with the eurozone progressing in reducing systemic risk and US fiscal cliff fears coming to the fore.
Henrietta Pacquement analyses the factors affecting growth in 2013, looking at the recent industrial numbers in the US and the Eurozone, as well as outlining the sources that have the potential to counteract these.
Jens Vanbrabant examines the current market volatility which makes an investors ride much more turbulent than risk metrics suggest. In addition to the three main reasons as to why markets performed strongly this week.
Derek Hynes looks back at the last decade of credit spread history, dividing his review into three distinct volatility regimes; Final stages of the leveraging cycle, the Financial crisis and the Eurozone sovereign crisis. He concludes by
discussing the question, ‘Looking backwards, where to from here?’
Jens Vanbrabant takes a closer look at the role market technicals are currently playing in credit markets in order to assess whether or not they will be able to provide a counterweight to the macro events of September.
This summer the UK department of Transport estimate that over 500,000 tourists are expected to visit London between 17th July and 18th August, plus an additional 70,000 athletes and officials. The occasion of course is London’s hosting of the 30th Modern Olympiad, the city’s third such occasion of hosting the games. This is a point in time that if you live in London however, one can expect a lot of overcrowding and disruption to travel at the very least!
Last week, Jens Vanbrabant wrote extensively about labour market reforms required across Europe. This week we focus on Italy. We will argue that, to save itself, the broad Italian political spectrum needs to convince markets quickly that very wide-ranging economic reforms will be implemented over the next five years.
European labour market reform: the long and winding road
Despite a reasonable level of corporate specific news flow, corporate market activity again remained at very low levels this week. The EN40 BBB Corporate index leaked mildly wider to close on Thursday at 262, but there was really little flow and even less convictionbehind this 3bps move. The primary market was equally moribund, with only €2.9bn (equivalent) of issuance, including a number of very small (e.g. Northern Powergrid £150m 20yr) and/or very long-dated (e.g. Thames Water £300m 34yr) issues. Moreover, even with today’s strong rally in iTraxx indices and single-name, there still has been very little trading in cash bonds or movement in cash spreads.
Europe experienced another week of gyrating but thinly traded markets. News of New Democracy’s win in the Greek elections created a very strong start to the week with the iTraxx Main index opening about 5bps tighter at 170/171 and Xover over 20bps tighter at 659/662. In turn, this strong market prompted a rush of primary transactions.
Henrietta Pacquement discusses the current political and financial issues in Greece, Spain and Italy, and how their outcomes will impact the economic future of the eurozone. She concludes by comparing the eurozone to the US, highlighting how the US is postponing addressing its public over-indebtedness.
"Short-termism in politics is a chronic affliction"Tom Clougherty - Adam Smith Institute
Jon Mawby considers some of the problems which have been encountered whilst trying to implement the principles of the most recent treaty and explains how Europe has been brought to the brink by Greece, a country that comprises around 2% of Eurozone GDP.
Amidst speculation about a potential Greek exit from the Euro, Satish Pulle examines the factors currently binding the eurozone together and looks at some of the eurozone’s key banks’ exposure to Greece, Italy and Spain.
“This is no time for complacency”, Henrietta Pacquement analyses the week gone by covering the effects of the LTRO wearing off and the European Macroeconimic Imbalance Procedure (MIP) scoreboard. There is also a focus on France in the current election campaign and a look ahead.
The enlargement of the European fiscal bailout system is discussed alongside analysis of the developments in the Spanish and Italian economic environment, concluding with thoughts on the adolescent age of the Euro.
Derek Hynes discusses core spreads and a liquidity fuelled economy. Behaviour in new issues are also analysed. The credit markets as a whole are looked at and how ECM is adjusting its portfolios accordingly.
Looks at the trend of market movements: the movement away from the fear of systemic risk and the movement towards a more normal environment, focussing on the underlying fundamentals of the various economies.
Henrietta Pacquement discusses shifts in market sentiment, including the current level of the markets’ ‘fear index’, the correlation between rates and equity markets, new issuances and changes to the economic and political landscape.