Tag Archives: investment grade bonds

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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Negative bond yields equal negative investor confidence

Last week, investors yet again favoured bonds over any other asset class, despite central banks cooing dovish everywhere.

The Fed is cutting rates? No worries, buy bonds. The European Central Bank prepares to push rates even further into negative territory? Bonds are the ticket. The Bank of England gets the printing press ready again? Oh yes, some bonds would be great.

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The rotation out of bonds into equities continues

Equities were the big winners of the past week in terms of capital flows, while investment grade bonds continued to haemorrhage funds.

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Sentiment on the brink of a ‘buy’ signal in oversold market

Stocks were technically oversold, and sentiment was on the brink of a “buy” signal last week, when at the same time there were weekly inflows into European, US and Japanese equities, according to flows data.

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Greece was seen as a ‘buy the dip’ case last week

Capital flows data show that Greece was seen as a “buy the dip” opportunity in Europe last week, before the results of a referendum on the eurozone bailout offer were known.

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Grexit risk causes bond exit – the bond bubble is deflating

Money shifted from bonds into equities for the second week running as the Greek debt crisis deepened, in what may be the beginning of the end for the decades-old bond bubble.

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Investment grade bonds see first outflows in 78 weeks

The first outflows in 78 weeks from investment grade bonds show how bad the “bond massacre” has been, according to a report about the most recent capital flows from Bank of America Merrill Lynch.

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