Home Week in Macro Yield Curve Signals and Junk Market Prospects

Yield Curve Signals and Junk Market Prospects

On the heels of the European and in Indian elections, we peeked into asset managers’ views of fixed income markets this week.

The news this week was dominated by PMI data releases, the US visit to Japan and by the parliamentary elections in India. Starting with Donald Trump‘s state visit to Japan, Ekonamik discussed the political consequences of Mr Trump’s challenge of Japan’s trade surplus with the USA and his tariff threats.  Still in Asia, but further west, markets rallied after Prime Minister Narendra Modi was re-elected in the final tally of India’s 6-week long election, despite a decidedly mixed record on the economy. All the way back in Europe and in the USA, the main economic development was the publication of IHS-Markit’s Flash Composite PMI estimates for the month of May, which showed both blocks slowing down.

Thematically, Ekonamik’s focus was on Fixed Income Markets this week. We began with an interview with Amundi’s Alban de Fay, about the asset managers efforts to provide liquid green returns from emerging markets and his view of Green bond premia. Inspired by the recent inversion of the yield curve, Ekonamik also considered the implications of this event in terms of economic forecasts and our place in the business cycle. Finally, our review of “Asset Managers’ Insights” highlighted the ongoing debate in the fixed income markets regarding the prospects of high yield bonds. While strong fundamentals seem to reassure some asset managers others find the market overvalued.

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