All articles by Caroline Hay – Page 7
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Features
The crunch continues
Yield curve/duration The credit crunch is now manifesting itself in the form of the massive writedowns by scores of financial institutions. The focus has moved from sub-prime to collateralised debt obligations of asset backed securities (CDOs of ABSs) to asset backed commercial paper (ABCP) as the disease spreads to the ...
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Inflation concerns continue
Yield curve/duration Corporate Europe is worried about the business outlook: both sentiment indicators and real economic news have been deteriorating over the summer. But with headline inflation so far above the European Central Bank’s (ECB) own target rate - in fact it hit double that level in July - there ...
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Markets still off the norm
Yield curve/duration Central banks across the world have been putting in place new measures in order to melt the liquidity freeze. Market conditions have generally improved over the month, although have hardly returned to anything like their historical norms. For example, spreads between LIBOR and other rates remain very wide ...
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Features
Headaches continue
Yield curve/duration While the US Federal Reserve has already begun to chop rates down - a remarkable 125 bps in the space of eight days - the European Central Bank (ECB) has maintained its hawkish tone and has kept its hand off the easing button. The futures markets are, however, ...
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Features
Batten down the hatches
The resilience of the European economy brought to the fore in January the question of whether the European Central Bank (ECB) would dare raise rates.
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Features
Curse of the liquidity freeze
Yield curve/duration: Market liquidity often worsens as end-of-the-year housekeeping and the holiday season approach. It is a regular, usually seasonal, pattern. What is different about the latest year-end is that the bid/offer spread widening spilled over into the futures contracts for the first quarter 2008.
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Features
Bank paper takes hit after subprime crisis
Yield curve/durationAnother rate cut from the US Federal Reserve was announced in the midst of some very ugly reporting numbers from several of the leading US investment banks. In its accompanying statement after announcing the quarter point cut, the Fed made it very clear that this was to be the ...
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Features
Thank goodness that's over
Yield/curve duration There is a sense of thankful relief that the third quarter is well and truly behind us, although September saw a great reversal of the flight to quality wave that so swamped the markets in July and August. As a result, government bonds have given back to the ...
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Fed’s rate cut buoys markets and steepens curve
Yield curve/duration lthough neither the ECB nor the Bank of England (BoE) raised rates at the start of September, the US Federal Reserve (Fed) did step in to cut rates. While the US forward markets had over the summer already moved to discount an early autumn rate cut, the size ...
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Features
Good spreads despite worrying fundamentals
Yield curve/duration Both the European Central Bank (ECB) and the Bank of England acted predictably this month, the former leaving rates alone and the latter hiking by a quarter point. The ECB stated that it would be maintaining its ‘vigilant’ stance, and the majority view is that European rates will ...
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Features
US Treasury yields positive as rate cuts on hold
Yield curve/duration The oil price is on the rise, and indeed has been since the start of the year. There are a variety of factors all contributing to the higher prices: strong global demand, recent colder weather, production cuts from OPEC and tensions created by the capture of the fifteen ...
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Margins holding up despite high-yield dip
Yield curve/duration Government bonds and other top quality credit have benefited from sharp rise in volatility and subsequent ‘flight-to-quality’ moves. Short-dated bond yields have fallen to such an extent in Europe that the market is not pricing in more European Central Bank (ECB) rate hikes this year. Although most investors ...
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Features
Looks like a soft landing for the US
Yield curve/duration The US economy may be heading for a soft landing after all, which is pretty much in line with the expectations of the policy makers themselves, namely the Federal Open Market Committee led by Chairman Bernanke. So far bond markets, led by US Treasuries, have been reasonably sanguine ...
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Don't think you have 2007 worked out
Yield curve/duration n exciting start to the year, with the latest US jobs number making sure that no investors get lazy and assume that they have already got the macro-trends for 2007 sussed out. The 167,000 net creation of jobs was significantly higher than most forecasts predicted and certainly highlights ...
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Credit markets set for tough year ahead
Yield curve/duration Though the US housing market continues to show significant signs of weakness, prompting economists to downgrade domestic growth forecasts, the US consumer has yet again surprised us by significantly increasing their spending rather than their savings during October. And another shock came in the form of a significantly ...
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Features
Japan leads government bonds revival
Yield curve/duration ccording to OECD data, it seems that the G7 economies (US, Japan, Germany, UK, France, Italy and Canada) are in the midst of a slowdown, with the US ‘in the lead’ and the European economies joining the trend most recently. With inflation fears lessening, markets have taken significant ...
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Features
Global liquidity under threat?
Yield curve/duration An uncomfortable unease is permeating all asset classes across all markets. What will the Fed chairman Bernanke do next? Go for more tightening to show the markets that he too is as tough on inflation as his hugely respected predecessor? Or will he wait, giving the US economy ...
