Corporate bondholders, beware. The wave of enthusiasm for this asset class, which has helped it to reach new heights, is now ebbing. A research paper recently published by the IMF illustrates the reasons behind this – although it must be said the paper does not represent the official position of the IMF.
Politics are back in play in most of Europe, and this doesn’t bode well for central bankers. Even the almighty European Central Bank had a moment of weakness last week, when it broadcast a message so complicated to markets that it should not be surprised it fell wide of the mark.
A change of direction so subtle that it is going unnoticed for now has begun in the economy – and investors will soon have to acknowledge it and learn to take advantage of it.
If you’re still struggling to put together a Halloween costume, RBS strategist Alberto Gallo suggests trying to dress like a zombie bank.
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.