Tag Archives: bond spreads

Stricter liquidity and leverage controls may be coming

If you are wondering what’s behind the sudden largesse of the European Central Bank (ECB) when it comes to purchases of bonds, you may find a recent speech by an ECB official at a conference about financial stability enlightening.

While regulators focused on making banks safer following the 2007-2009 financial crisis, the non-bank financial sector has been allowed to continue without the same stringent requirements for liquidity and leverage. This gap came into sharp focus during the crisis caused by the Covid-19 pandemic.

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Investors’ worries about Italy are justified

With summer over, Italy is back at the forefront of the news – this time not as a holiday destination but in its other capacity, as chief source of market worries. The way things are going, the worries are only just beginning.

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High-yield bonds hit bump in the road

The reports – or rumours, as some have called them – that the European Central Bank may decide to buy eurozone corporate debt couldn’t have come at a better time for high-yield bonds.

A report by Austria’s Erste Bank shows that over the past two weeks, the restlessness in equities has also been felt by corporate bonds, and particularly high-yield bonds.

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Why you shouldn’t worry about a bear market yet

Some commentators have warned that a bear market in stocks could be near, citing things like the fall in US long-term interest rates or the decline of volatility as a sign of investor complacency.

But Garry Evans, global head of equity strategy at HSBC, argues that actually, a bear market usually starts when long-term interest rates and volatility are rising – although they are not necessarily reliable indicators.

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