Perspectives Blog

Comments on the effect on global markets from the Ukraine crisis

Mark Burgess, Chief Investment Officer, Threadneedle Investments | March 12, 2014

To date, the fallout from the Ukrainian crisis has been largely confined to the emerging market debt, emerging market equity and commodity markets. At current levels, emerging market local currency debt appears to offer value, although we expect both the hard and local currency markets to remain volatile in the short term. Emerging equities reflect concerns not only around Russia and Ukraine but also the weaker growth outlook in Brazil and China…

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

…only about 7% of total banking sector assets. Another shadow banking product is wealth management products issued by banks at Rmb10trn, less than 10% of bank’s total deposit base. • China has only 10% of gross external debt of gross domestic product (GDP), almost the smallest among all emerging countries. That means debts are largely domestically funded, and by adding in all forms of non-loan and off-balance sheet credit, the resulting ban…

Q2 fixed income outlook – Hitting for the cycle

Gene Tannuzzo, CFA, Senior Portfolio Manager | March 31, 2014

We have started to reduce exposure to high-quality bonds with limited upside potential and high-yield bonds in which credit risk appears too aggressive. Following weakness last year, emerging market debt has posted gains this year, and we expect further strength ahead as volatility subsides. While we expect a flatter yield curve over the next few months as investors focus on the timing and pace of rate increases, we don’t think they should avoi…

Making sense of Detroit’s bankruptcy filing

Ty Schoback, Senior Municipal Analyst | July 25, 2013

…perhaps more troubling from a municipal credit standpoint is the Governor of Michigan’s recent endorsement of Mr. Orr’s restructuring proposal that included an impairment of the city’s Unlimited Tax General Obligation (UTGO) debt — essentially lumping GO debt in with the city’s other unsecured creditors. UTGO bonds have long been considered the gold standard in the municipal market. The governor’s endorsement of this impairment of Detroit’s UTGO…

The importance of taking a long-term perspective

Jeffrey Knight, CFA, Head of Global Asset Allocation | February 3, 2014

…U.S. Aggregate Bond Index is a market value-weighted index that tracks the daily price, coupon, pay-downs, and total return performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues with at least $250 million par amount outstanding and with at least one year to final maturity. The Barclays U.S. Corporate Investment Grade Index is an unmanaged index consisting of publicly issued U.S. Corporat…

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

…itive median total return, most sectors did experience price losses in the mid-single digit range. However, there are some examples of sectors that have experienced price gains even while Treasury yields rose. Emerging market debt stands out as a strong performer in these environments as sovereign fundamentals in developing economies are less dependent on U.S. rates. Floating rate bank loans have also seen modest price gains, as interest in the a…

The Fed’s decision tree

Zach Pandl, Portfolio Manager and Strategist | October 8, 2013

…t be known for certain, but estimates from economists suggest a drag of about 0.25%-0.50% on annualized fourth quarter gross domestic product (GDP) for every two weeks the federal government remains closed. Needless to say, a debt ceiling crisis could have much more worrisome impacts on the economy if it leads to a missed payment on the government’s debt. If the standoff continues beyond this week it will likely increasingly cloud the U.S. econom…