European bonds markets had a lot to take in last week.
LONDON, May 3 - At a time when the impending withdrawal of European Central Bank stimulus was expected to hurt southern
European bond markets, so - called «peripheral» euro zone debt continues to outperform its higher - rated peers.
LONDON (Reuters)- At a time when the impending withdrawal of European Central Bank stimulus was expected to hurt southern
European bond markets, so - called «peripheral» euro zone debt continues to outperform its higher - rated peers.
In 2015, government - owned stalwarts like China State Grid International Development Co. and China Construction Bank led a boomlet of diversification into
European bond markets, raising $ 9 billion on the continent, compared with $ 80 billion in dollars.
European bond markets initially welcomed the deal made at the July summit, although the narrowing of spreads for peripheral bonds over German Bunds was relatively muted, perhaps signaling a measure of skepticism among investors about the ability of the eurozone to survive in the absence of a formal mechanism that ensures the sharing of liabilities among member states.
It's also interesting to examine the changing significance and dynamics of
the European bond market in general, which has almost doubled in size since 2005 to more than $ 10 trillion today, including government, investment - grade corporate debt and high yield.
We think that's an important development for the diversification of
the European bond markets, but also for investors who need to have that global reach to be able to understand all the names being issued in Europe.
Capital Markets Fixed Income US companies are rushing to borrow in
European bond markets.
Plenty of risks that could emanate from the U.S but a blow up of
the European bond market will have global market interest rate reverberations.
FRA: What about your thoughts, Peter you recently mentioned, Europe could be the epicentre of the next financial crisis coming out of
the European bond market.
It may not necessarily be very aggressive tightening, but they are likely to begin to raise interest rates soon and that means — as I see it — the US bond market may give lower returns than
the European bond market.
This is quite a different result than earlier this year, when
European bond market bonds sold off in fear that a Fed rate hike would lead to a shift away from European government bond markets to the higher yields and high quality of the US government bond market.
Given the disparity, how should a U.S. investor think about
the European bond market?
Following the surprise European Central Bank (ECB) announcement earlier in December,
European bond markets experienced significant steepening.
This coupled with concerns that
European bond markets are overvalued in light of the ECB's QE expectations, and whether deflation concerns are over-hyped, are giving the market mixed signals.
Not exact matches
Markets in Europe closed higher Thursday after the
European Central Bank (ECB) announced that it plans to extend, but reduce, its
bond - buying program.
Over the past few sessions, we've seen fairly consistent rises across
European government
bond markets and that's spilled over to the U.S.» said Anthony Valeri, senior vice president of fixed income research at LPL Financial.
That money, which is mostly held in short - term U.S.
bonds and money
market funds, was kept in Ireland for years, until an investigation by the
European Union into whether the company failed to pay taxes caused it to move its holdings to Jersey, a small island off the coast of Normandy that rarely taxes corporations.
«Following the U.K. election, the relative risk investors saw in
European bonds came back and as the situation in Greece develops, risks will hopefully unwind and as we move into a certain environment, we can expect
bond markets to continue to normalize,» Thomas Buckingham, portfolio manager of the
European Equity Group at JP Morgan Asset Management, told CNBC on Monday.
With most of these debts being held by Chinese entities, it's unlikely we'll see a banking crisis in the same way we could have seen if Greece or Spain went belly up, said Lau — many foreign banks hold
European bonds — but we've seen
markets panic on far less worrisome Chinese news in the past.
A softening in euro zone economic data and signs that inflationary pressures remain subdued, encouraging the
European Central to hold off from raising interest rates until well into 2019, have supported
bond markets in recent weeks.
The
European Central Bank is all but certain to cut back on its
bond - buying stimulus on Thursday, one of the biggest factors supporting the rally in global stock
markets in recent months.
But more than anyone, Mr. Schäuble has come to embody the consensus that has helped shape
European economic policy for years: that the path to sustained economic recovery for financially troubled countries is to slash spending, raise taxes when necessary and win back the trust of
bond markets and other investors by displaying commitment to fiscal prudence — even if that process imposes deep economic pain as it plays out.
European Central Bank President, Mario Draghi, addressed the recent volatility in the
bond market.
However, he acknowledged that the current state of sovereign
bond markets was «not normal,» and «some sort of
European solution» was necessary.
Many
market participants are expecting the
European Central Bank (ECB) to launch a full - scale quantitative easing (QE) program in the next few months, whereby it would enter the
market and buy sovereign
bonds in large quantities.
We prefer selected subordinated financial debt within
European credit and favor high - quality U.S. credit and emerging
market debt over government
bonds, but credit valuations are elevated across the board.
A jump in sovereign yields could spark
European credit
market outflows, hurting richer investment grade
bonds.
Amid the political mayhem, Greece's cost of borrowing ballooned, with the interest demanded by
markets to buy Greek 10 - year
bonds exceeding 31 percent - compared with 2 percent for
European powerhouse Germany.
Kroll
Bond Rating Agency Europe Limited is registered as a Credit Rating Agency by
European Securities and
Markets Authority (ESMA)
The biggest beneficiaries of the CSPP may be smaller
European companies that have traditionally been excluded from
bond markets and have seen bank credit grow scarcer, Deloitte's Burgin says.
It seems that the ECB will utilize the
European corporate
bond market to meet its requirement and stay true to its CAPITAL KEY.
These fears drove losses in the
market prices of
bonds in Italy, Greece and other troubled
European countries.
Greece returns to
bond market after three - year hiatus Having recently secured another bailout tranche from
European creditors, Greece returned to the
bond markets with a $ 3 billion five - year offering, which was more than two times oversubscribed.
European government
bonds have reacted quite favorably to the latest announcements, specifically in the peripheral
markets: Italy and Spain in particular have done quite well.
The big takeaway for those seeking to buy into
market weakness: Be wary of buying notionally cheap assets that face challenges (e.g. domestically - focused
European assets like U.K. real estate and
European banks), and instead focus on assets with relatively attractive valuations and positive fundamental drivers, such as quality stocks, dividend - growth stocks and investment - grade
bonds.
Prior to September 2009, the BUND was the only
bond future contract available to manage risk and speculate on the
European debt
markets.
Indeed, world currency
markets have roared back to life lately after years of hibernation, with a handful of monetary policy surprises — including the
European Central Bank (ECB)'s bigger - than - expected
bond buying program and the Federal Reserve (Fed)'s delay in raising rates — leading to rising volatility, as the chart below shows.
This equally divided lazy portfolio limits the
bond investments to 25 % percent of the entire portfolio with the remaining 75 % equally divided among a broad US stock
market index fund, a
European fund, and a U.S. index comprised of smaller companies.
«Gold ranks higher than all
European sovereign debt
markets, and trails only US Treasuries and Japanese government
bonds.
The unit, the chief investment office (CIO), has been the biggest buyer of
European mortgage - backed
bonds and other complex debt securities such as collateralized loan obligations in all
markets for more than three years... The unit made a deliberate move out of safer assets such as US Treasuries in 2009 in an effort to increase returns and diversify investments.»
And we have the ECB [
European Central Bank], again, likely to tell us what their plans are and not for selling
bonds back into the
market, I think not at this stage for changing their interest rate policy, but again, slowing the rates of purchase of
bonds.
Indeed, the supply of dollar
bond issuance in this year's first quarter hit record levels, and those levels don't account for the increased use of «reverse Yankee issuance,» whereby U.S. corporations issue into
European markets denominated in euros.
In the days since UK Prime Minister David Cameron confirmed the date of the referendum,
markets have experienced some volatility focused on UK - specific assets; spreads for some UK issuers of euro - denominated
bonds have widened considerably for no apparent reason, which suggests to us that a lot of
Europeans are selling their UK exposure.
I'd be much more interested in how large JPM's mark - to -
market losses are on the
European mortgage - backed
bonds than how much loss they've sustained on the hedge.
LONDON (AP)--
European stock
markets dipped Thursday while the euro struck two - week highs against the dollar after the
European Central Bank left its key interest rates unchanged and decided against extending the duration of its
bond - buying stimulus...
This is in contrast to US and
European markets, where corporate
bond spreads to swaps have risen over the period.
For now, we are currently seeing the anticipated liquidity reduction harvest of wind in what are academically considered the riskiest of assets — emerging
market equities and
bonds, currencies, and commodities — as equities of developed countries such as the US, Japan and some
European nations have continued to hold up.
To better understand green
bond performance and valuations in the secondary
market, Morgan Stanley analyzed 121 self - labeled U.S. and
European bonds, focusing on corporate, and government or government - related benchmark - size securities (at least $ 500 million).
Outright Monetary Transactions are a
bond - buying program announced in September 2012 in which the
European Central Bank would offer to purchase eurozone countries» short - term
bonds in the secondary
market to bring down the
market interest rates faced by countries subject to speculation that they might leave the euro.