In an Insight published yesterday, we noted that the euro area is now projected to contract in Q4, as a result of the recent second wave in COVID-19 cases and the associated lockdown measures to suppress its spread. We also noted…
It is in fashion to talk about the collapse of Italian yields to record lows, but one of the key investment implications of this move is often overlooked: it makes Italian banks attractive relative to lenders in other nations…
Highlights Butterflies & Yield Curve Models: With bond market volatility now back to the subdued levels seen prior to the COVID-19 market turbulence earlier in 2020, it is a good time to update our global yield curve valuation…
Highlights Global stimulus efforts are sufficient thus far, but more will need to be done, especially by Europe and emerging markets. Hiccups will not be well-received by financial markets. The net public wealth of countries helps put…
Highlights ECB: The ECB disappointed markets last week who expected an increase in the size of its asset purchase schemes given the recent increase of Italian bond yields. For now, the central bank remains focused on preventing a…
Highlights Europe’s dirty little secret: Euro area debt is already mutualised. Investment implication: Overweight Italian BTPs, underweight German bunds, and overweight the euro on a structural (2-year plus) horizon. ESM plus…
Highlights Bond Yield Differentials: The deepening global recession has prompted aggressive monetary easing measures by virtually every developed economy central bank. With policy rates now near zero everywhere, government bond yield…
The number of newly reported cases of COVID-19 in Italy and Spain seems to have peaked 13 days ago. This by no means indicates that an end of the lockdowns is imminent, but if China’s experience is any guide, it suggests…