The evidence doesn’t point to recession
Growth in 2022 is likely to be above historical averages for most developed economies, even after adjusting forecasts for the impact of the Russian invasion.
Insights Topic
Europe
Powell confirms Fed pivot is complete
Officially the Fed pivoted from its ‘transitory’ inflation rhetoric in December last year.
Wave of inflation means companies will sink or swim on pricing power
Soaring inflation was already a dominant theme for markets coming into 2022. The sanctions imposed on Russia in response to its invasion of Ukraine have only exacerbated its expected rise, and pushed its expected peak further out.
Investors face conundrum on government bond allocations
We think a base case that central banks will follow a more measured monetary policy path than markets are currently pricing in is reasonable given the current backdrop.
Rising HY defaults more than priced in
Default rate estimations depend on how you define defaults and what index you use, but there is no doubt we are at record lows in European high yield at the moment.
Investors are overreacting to banks’ Russia exposure
European bank equity has been among the hardest hit sectors since Russia’s invasion of Ukraine, as fears of losses and a flight to quality have prompted investors to change positioning.
What are government bonds saying?
Yield curve shape and yield curve change are often good predictors of the state of the economy and its outlook.
Managing the downturn
As 2021 wore on we became increasingly concerned that the disconnect between asset prices, economic fundamentals and monetary policy was becoming more acute.
Catching up the curve
Yesterday was a noisy day for the Bank of England (BoE) and European Central Bank (ECB), usually an undesirable situation for market participants.
European ABS: Five things to expect in 2022
If 2021 was a bad year for global bond returns, it follows there were few natural shelters to be found within fixed income from the brunt of inflation and rates-driven volatility; the Barclays Global Aggregate Index (a widely used broad measure of bond performance) returned -4.7% in USD terms, while European investment grade credit returned -1.1% despite credit spreads tightening over the course of the year.
Specialist lenders lead stacked pipeline in ABS
The first two trading weeks of the year are coming to an end and unlike previous years they have been packed with activity.
French government pulls the plug on EDF
Électricité de France (EDF) shares fell by as much as 25% on Friday morning after the French government announced exceptional measures to limit the impact of high electricity prices on French consumers, at the expense of the energy provider – the shares are down over 30% since start of December.