Panoramic Weekly: Bonds take a bath

Oct 11 08:10 2018 Print This Article

The bond sell-off that started last week with the publication of strong US data continued over the past five trading days, even if Friday’s job report came in below expectations and a slew of global data and events only confirmed a worsening momentum: the International Monetary Fund (IMF) cut this year’s world economic growth forecast to 3.7%, down from 3.9%, citing challenges to trade; Italian 10-year bond yields spiked to 3.5% as the government’s turf war with Brussels over the country’s budget intensified; Germany’s industrial output was much weaker than expected (more below); South Africa replaced its finance minister after corruption scandals, and Japan’s Tankan manufacturing report posted a third straight quarterly drop. The backdrop seemed to depress everybody as both bond and equity markets fell. In fixed income, only 9 of the 100 asset classes tracked by Panoramic Weekly posted positive gains.

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Bond Vigilantes

Bond Vigilantes is here to share the writers views on the things that matter to bond investors – inflation, interest rates and the global economy – as well as to talk about the bond markets themselves. Over the past few years, they have covered topics like value in high yield bonds, the outlook for emerging market debt, and new developments in the inflation-linked bond markets. Being a good bond vigilante should also be about identifying deteriorating trends in corporate behaviour, as well as that of governments.

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