Attention Returns to Central Banks
After the most hectic week of the year to date, relative calm has at least temporarily been restored to markets.
Insights Topic
TwentyFour Blog
Opportunity or Not?
Clearly the decision by Italian President, Sergio Mattarella, to refuse the appointment of Paolo Savona as the coalition’s Finance Minister, on the grounds of him being overtly eurosceptic, has backfired badly.
Lost The Dot Plots
During and since the global financial crisis the Federal Open Market Committee (FOMC) has done a remarkable job in navigating the US financial system under extremely challenging circumstances, setting the standard for other central banks to follow.
Italy Agreement: More Hope Than Expectation
We are currently of the view that the market panic generated by the plan published by the new Italian government is a bit excessive.
ABS Risk Tiering
European ABS market performance and volatility have been remarkably stable since 2016, largely weathering broader credit weaknesses so far this year.
How Concerned Is The Fed With The Yield Curve?
After another week of yield curve flattening, we now have the 2s-10s curve in US Treasuries at just 43 basis points.
STS Revisions Fall Short of Game-changing
Last year we wrote about the forthcoming "STS" (Simple, Transparent and Standardised) regulation for securitisation, designed in part to harmonise eligibility and capital charges for ABS across the wider regulatory landscape.
China Demands More Attention in 2018
Paying attention to China will be even more important to investors than usual in 2018.
What we are not doing in High Yield
We have often started our portfolio discussions with clients this year with what we don’t like in fixed income. Unfortunately the list for 2018 is relatively long and quite large when measured on a market cap basis.
Mixed message from HSBC
HSBC released its Q1-2018 results this morning which were a little underwhelming with bottom line profit before tax a touch below estimates (down 4% on Q1-17) and return on equity of 7.5% (compared to 8.0% in Q1-17), but that aside the numbers give investors little concern.
The Fed and The Treasury Will Also Drive The Yield Curve Shape
Having written recently about our thoughts on how the yield curve might flatten, we should also note that whilst this, our base case scenario, is happening at the moment, there are a number of other potential strong influences that we need to monitor as they have the ability to prolong this flattening.
Other Recessionary Indicators
Having discussed the shape of the yield curve as a recessionary indicator already last week, we would like to elaborate on what other indicators we look at as fixed income investors to determine where we are in the economic cycle, which in turn determines how we position ourselves on the yield curve and whether we look to credit risks or government bond risks.