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Macro and Micro Issues in Fixed Income Markets

Fixed Income Markets in September 2018

From a micro perspective, Barings explores the world of European Private Credit, the CFA Institute Research Foundation provides a detailed instructional guide about High Yield Credit analysis, and Macquarie looks at supranational bonds as an alternative to EM local credit. 

Or, from a top-down, macro point of view, why not discover what systemic risks are imposed by the swelling of the global corporate bond market, see how current voting members of the FOMC are interpreting the flatness of the U.S. treasury yield curve, or find out whether the international regime shift from QE to QT necessarily implies that the wind will be taken out of the global economy's sails?  There should be something suitable on Savvy for all sorts of bond enthusiasts.

fixed income agency mbs

Money Market Funds: Are You EU Reform Ready? (State Street Global Advisors, Sep 2018)
(For compliance reasons, this paper is only accessible in the UK)
Existing money market funds will be required to comply with new reforms by the 21st of January, 2019. State Street discusses the new regulations and asks – are you prepared?

Institutional guide to Bond ETFs (BlackRock, 2018)
(For compliance reasons, this paper is only accessible in the United States)
The Guide to Bond ETFs offers to institutions the tools and resources that are necessary in order to integrate ETFs within their investment strategies.

Taking a Disciplined Approach to European Private Credit (Barings, Aug 2018)
Adam Wheeler of Barings explains why, due to the evolving dynamics of the European private credit market, it is beneficial to undertake a disciplined approach when considering such investments. 

Fixed Income Quarterly Report - Q3 2018 (Hermes IM)
Andrew Jackson, Head of Fixed Income, explains how he sees value across credit markets but perceives the best opportunities to exist in difficult-to-access sectors.

Foundations of High-Yield Analysis (CFA Institute Research Foundation, 2018)
This Research Foundation brief looks at risk premiums, credit analysis, default rate forecasting, the corporate bankruptcy process, and covenants, within the context of the high-yield bond market.

Rising Corporate Debt: Peril or Promise? (McKinsey Global Institute, 2018)
Instead of decreasing, the amount of total debt outstanding worldwide has risen 74% since the GFC began (through mid-2017).  McKinsey looks at the growing global credit market, its inherent risks, and the resulting implications. 

Supranational EM bonds: Unique access to EM local bond markets (Macquarie, 2018)
Investment grade credit ratings, attractive yields, and a lack of settlement concerns, among other reasons, have led to increased interest in supranational EM debt.

Macro and Market Perspectives: Beware of the Q Trap (BlackRock, Aug 2018)
If QE inflates asset values and suppresses volatility, then QT should do the opposite, right?  BlackRock states here that reality is more complicated, and warns against the 'Q Trap' previously described. 

Optimising emerging market debt exposure (Fidelity Intl blog, 2018)
(For compliance reasons, this paper is only accessible in the UK and Europe)
Fidelity International looks at the process of allocating to emerging market debt and determining the optimal EMD exposure. 

M&A and LBO issuers boost new-issue supply for loans (Eaton Vance, Sep 2018)
(For compliance reasons, this paper is not accessible in the U.S. and Canada)
In this Q&A, the Eaton Vance floating-rate loan team offers its perspective on the market for the second quarter of 2018 and what may be ahead for the rest of the year.

A new playbook for a bond market in transition (Eaton Vance, Aug 2018)
(For compliance reasons, this paper is only accessible in the U.S. and Canada)
A new fixed-income “playbook” is needed to succeed in an environment that we expect will have higher inflation, future dollar weakness and increased volatility. This brief paper by Eaton Vance Institutional explains further.

Understanding ESG in Credit Portfolios (Macquarie, 2018)
Macquarie addresses the following questions: How do ESG factors affect fixed income returns? In what way do they impact the pricing of credit? And how do these factors influence credit quality?

What Does the Current Slope of the Yield Curve Tell Us? (Atlanta Fed, Aug 2018)
Atlanta Fed president Raphael Bostic discusses the way that he interprets the flat yield curve present in the USA, stressing that correlation does not imply causality when looking at yield curves and economic recessions.