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.
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.
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.