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Europe at a Crossroads: The Time for Bolder Policy Action Is at Hand
Rick Rieder argues that anemic growth in Europe is a longstanding problem that today requires a bold solution. Institutionally, the ECB can offer potentially effective, if unconventional, help. A shorter version of this commentary appeared in the Financial Times on July 22, 2019. A specter is haunting Europe – the specter of anemic growth. Ten years have passed since the
High-Yield Credit in a Fed Easing Cycle
High-yield corporate bond spreads and bank loan discount margins typically widen when the Fed is lowering interest rates. Here are the key takeaways from our third quarter High-Yield and Bank Loan Outlook report: Investors may be tempted to go down in quality in anticipation of a Fed-induced rally in leveraged credit. History suggests this would be ill-advised. On average since
Brazil Takes Big Reform Step
Pension funding has been an issue in many parts of the world and has certainly been a hot topic in Brazil. President Jair Bolsonaro’s election ignited market optimism on promises to reform pensions to get Brazil’s fiscal house on a firmer footing. The probability of this being delivered has increased considerably after approval of a new pension reform bill in
Farewell to Data Dependence
Until recently, Fed Chair, Jerome Powell sounded a consistent theme: the Fed is data dependent and will stay that way, unswayed by noise or pressure from politicians. When the FOMC released its rate decision last month, it got as dovish as it could without actually cutting short-term rates. It downgraded its assessment of economic growth from "solid" to "moderate" while
India Confronts Its Challenges, China Shows Restraint, and a New ECB Leader Is Named
SUMMARY India: Mind The Gap Is China’s Treasury Portfolio a Threat? Europe’s Key Person Risk Vaibhav reports on what’s ahead for India after recent elections. The decade of the 1990s in India was an era of rapid change. The sudden rise of new choices and shifts in consumer preferences was stunning, in hindsight. Not too long ago, to watch our
What’s the Long-Term Oil Outlook? Watch How the Majors Invest
What’s the long-term outlook for oil in a world shifting to renewable energy? Oil majors publicly say supply-and-demand dynamics will support the market. But their investment choices suggest that they’re preparing for a much weaker oil price in the distant future. Forecasting long-term oil trends is very complicated work. Demand is affected by variables, including the economic growth of emerging
The Trade War in the Context of Broader Themes
Rick Rieder and Russ Brownback argue that while most investors are focusing primarily on trade-related supply chain disruptions today, they need to continue to situate this turmoil in the more fundamental changes at play in technology and demographic trends. Myopia in life/death and in investing The leading causes of death in the United States, by an overwhelming margin, are heart
Weighing the Week Ahead: Chinese Fireworks?
The economic calendar is a big one, featuring the employment situation report on Friday. The rest of the data – ADP employment, auto sales, and the ISM surveys – will be released over 2 ½ days. The US Independence Day celebration on Thursday will provide one type of fireworks. And of course, we have Canada Day on Monday. The combination
The Pivot Favoring Emerging Markets
Russ explains why the suddenly easier central bank policies could be key for emerging markets. During the week of June 17th, almost every asset class, from emerging market debt to bitcoin, surged. The catalyst? The same one responsible for the 10-year old bull market: easier monetary policy. This suggests that while uncharacteristically stingy central banks may have harmed risky assets
Five Reasons Why China is Unlikely to Devalue the Renminbi
For years, President Trump has accused China of purposely devaluing the renminbi to boost exports. With trade and political tensions boiling over, the question of whether China will devalue the renminbi often comes up. We don’t think China will intentionally weaken the renminbi to counteract US tariffs. Yes, it weakened about 2.5% versus the US dollar in May when trade