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from Breakingviews:

Asian bond sizzle is a bet on deflationary fizzle

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By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The Asian bond market is sizzling. But that doesn’t mean investors are being reckless. Rather, it might reflect growing worries that the global economy is fizzling into deflation.

So far in 2014, companies and governments in the region have raised $50 billion by selling debt denominated in U.S. dollars, euro and yen. That exceeds the $49 billion they had raised in hard currency by the same point in 2013, according to data compiled by Reuters.

Strong investor appetite is evident in the mediocre returns they’re willing to accept. Sri Lanka recently sold a 5.5-year dollar bond at record low yields. Even Pakistan, which was bailed out by the International Monetary Fund last year, has borrowed $2 billion for 10 years, tapping the market after a seven-year gap.

from Anatole Kaletsky:

Behind Wall Street’s anxiety

The recent economic news has been about as investor-friendly as anyone could imagine.

It started with last week’s strong U.S. employment figures; continued through Tuesday’s reassuring International Monetary Fund forecasts, which put the probability of avoiding a global recession this year to 99.9 percent, and culminated in dovish Federal Reserve minutes, which soothed concerns about an earlier than expected  increase in U.S. interest rates.

from Breakingviews:

Greek bond fever may do economy few favours

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By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Greece’s first bond in four years has met roaring demand. The 3 billion euro deal suggests past bondholder losses and present economic woes are forgiven and forgotten. But the country still has big problems. Excessive investor enthusiasm could reduce the pressure to reform.

from Counterparties:

MORNING BID – Dot Matrix

The Federal Reserve did it again, giving back to the markets at a time when it wasn't expected, and showing once again that the early months of a new Fed chair's tenure are fraught ones, in terms of interpreting monetary policy.

Janet Yellen probably didn't mean to suggest rate hikes could come as soon as six months after the bond-buying program ends for good. And the release of the Fed minutes also demonstrated that the Fed - even in discussing projections - worried about how it would all look, specifically the "dot matrix" that showed several Fed members saw higher rates before long, and really, that it was all just kind of overstated. (Yellen even said this at her press conference - that the dots did not mean what you thought they meant).

from Counterparties:

MORNING BID – The same-store situation

Same-store sales figures may be enough to inspire some investors to resume paring portfolios of some consumer discretionary stocks that have underperformed in the last five or six weeks.

Equities rebounded on Tuesday, but the overall feeling is that the market hasn’t yet finished with the bout of selling infecting the high-volatility, high-beta names that dominate conversations.
Most consumer names aren’t in this rarefied air (they don’t trade at price-to-sales ratios of a gajillion) but they’ve still been a target for some time on bad news.

from Global Investing:

Buying back into emerging markets

After almost a year of selling emerging markets, investors seem to be returning in force. The latest to turn positive on the asset class is asset and wealth manager Pictet Group (AUM: 265 billion pounds) which said on Tuesday its asset management division (clarifies division of Pictet) was starting to build positions on emerging equities and local currency debt. It has an overweight position on the latter for the first time since it went underweight last July.

Local emerging debt has been out of favour with investors because of how volatile currencies have been since last May, For an investor who is funding an emerging market investments from dollars or euros, a fast-falling rand can wipe out any gains he makes on a South African bond. But the rand and its peers such as the Turkish lira, Indian rupee, Indonesian rupiah and Brazilan real -- at the forefront of last year's selloff --  have stabilised from the lows hit in recent months.  According to Pictet Asset Management:

from Global Investing:

Ukraine and the IMF: a sense of deja vu

The West has just agreed to stump up a load of cash for Ukraine but there is a distinct sense of deja vu around it all.

Let's face it - Ukraine's track record on how it manages ts economy and foreign affairs isn't great. This is the third aid programme Kiev has signed with the International Monetary Fund in a decade and two of them have failed. The IMF has its fingers crossed that this one will not go the way of the past two. Reza Moghadam, the IMF's top European official, tells Reuters in an interview:

from Counterparties:

MORNING BID – Pitfalls and switchbacks

This week profiles as one that contains a bunch of potential minefields that could challenge the market's prevailing view on what's to happen with major market-moving events.

The ECB meeting is one of the more obvious ones, what with investors expecting for some time that the euro would push higher and higher on the expectation of an improved outlook in the economic situation there.

from Counterparties:

MORNING BID – $4 trillion, through the eye of a needle

The shift in the stock market away from momentum names and toward value is encouraging at least in some sense because it points to an ongoing appetite for equities rather than a reduction in interest there. However, one has to add the caveat that the Federal Reserve is still very much a part of this market, even as it diminishes its footprint.

The $55 billion in bond buying per month definitely continues to underpin rates and keep funding costs low for companies. Still, the market has reduced its reliance on the central bank and yet bond yields continue to sink, at least in the long-dated part of the curve, where the 30-year note neared 3.50 percent and the 10-year came close to 2.60 percent yet again.

from Global Investing:

CORRECTED-Toothless or not, Western sanctions bite Russian bonds

(corrects last paragraph to show that Timchenko was Gunvor's co-founder, not a former CEO)

Western sanctions against Russia lack bite, that's the consensus. Yet the bonds of some Russian companies have taken a hit, especially the ones whose bosses have been targeted for visa- and asset freezes.

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