Europe

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

Recently, our credit experts delved into the performance of the high-yield market, revealing how the maturity wall does not seem to be a significant challenge for most companies.

Yesterday unveiled the latest Manufacturing and Services PMIs in Europe, bringing a mix of economic news. Dive into the results with Felipe Villarroel as he looks at the numbers and what they mean for central banks in the battle against inflation.

The Dutch elections took an unexpected turn as it looks like Geert Wilders' Freedom Party (PVV) will gain 20 seats and become the largest party with 37 of 150 seats.

Whilst bank debt has recovered from the contagion of the US regional banking crisis and the Credit Suisse write down event earlier this year, many bonds are still trading wider than they were at the beginning of the year.

Yesterday, market participants received two important reports about the state of the economy in the Eurozone. Firstly, the October Markit PMI – Purchasing Managers’ Index - reports showed a continued deterioration in growth in the manufacturing as well as the services sector.

Fixed income investors have gone through a stressful few weeks. Since the beginning of September, government bond yields have moved sharply higher, causing spreads to widen and returns to worsen across the board. 

Following the recent publication of the European Central Bank's monthly “Monetary Developments in the Euro Area” report, Felipe Villarroel takes a deep dive into how this report evidences the impact that successive rate hikes are having on the economy

Felipe Villarroel argues that it will not be long before we see yields in fixed income assets at levels markedly above spot inflation which could translate in investors racing to lock in those yields.

Dillon Lancaster comments on the divergence in views from ECB members, and whether the end of the week will see a 'skip' or 'hawkish pause'. He believes either outcome is not likely to have a huge effect on the market.

Felipe Villarroel shares his thoughts on the recently released preliminary PMI data, which he concludes is a reminder that the hiking cycle only started 18 months ago and there are lags that are yet to be felt in the real economy, reiterating some of his previous views.

As governments around the world provided support in various manners during the pandemic, savings ratios increased to levels that were twice as large as the previous all time highs in some countries. Felipe Villarroel takes a look at some countries' spending vs savings monthly data patterns and lays out what he thinks this means for fixed income investors.