Entities including JPMorgan Asset Management and PIMCO are establishing dedicated funds that will buy high-risk European corporate debt that can potentially deliver high returns. The fund managers aim to be ready to make timely purchases of distressed debt in the European economy's anticipated slowdown.
UK Chancellor Sajid Javid said he is "quite optimistic" the UK can conclude negotiations on trade treaties with both the US and EU by the end of this year. US Treasury Secretary Steven Mnuchin said following a meeting with Javid the US is "prepared to dedicate a lot of resources" to concluding a trade agreement with Britain.
JPMorgan Chase, Nomura and BNP Paribas are vying to market the first managed synthetic collateralised debt obligation since the 2008 financial crisis, sources say. The banks are now looking to extend the offerings' expiry dates to make them more attractive to hedge-fund investors.
A trend toward shorter durations on high-yield debt has served to enhance the asset class's attractiveness to investors, writes Sam Goldfarb. Typical durations now stand at three years, a drop of almost 25% since late 2018, while investment-grade debt has grown riskier due to lengthening durations.
The European Central Bank's inflation target, adopted in 1998, has hampered eurozone growth and alternative measurements of economic health should be considered, writes Wolfgang Munchau.
The European Central Bank's regulatory arm has signaled a more flexible approach to overseeing eurozone bank consolidations. "Somewhere in the back of their minds, the ECB realizes that the negative rates environment is weighting on profitability of the banks, and they need to do something about it," said Axiom Alternative Investments research chief Jerome Legras.
The UK Financial Conduct Authority has added further pressure to move away from the London Interbank Offered Rate with the warning that markets "should not assume that any period of non-representative Libor... would last for more than a short period, that is a period of months, not years." Derivatives markets have yet to agree on how they will handle the Libor phase-out.
Data from Rosenblatt Securities indicates that the EU's revised Markets in Financial Instruments Directive has failed to shift trades from private over-the-counter markets to lit exchanges. "If you try and force the market to do something by constraining it, the market doesn't always just follow the lead," said Cboe Europe president elect Dave Howson.
Fears that the coronavirus outbreak in China could see a repeat of the 2003 SARS pandemic have hit the recent rally in emerging-market equity, fixed-income and currency markets. "With valuations elevated, asset classes are already vulnerable to shifts in sentiment, and memories of the meaningful economic impact of SARS has the potential to play havoc with market confidence," said Principal Global Investors strategy chief Seema Shah.
Some 67% of investment professionals responding to a recent BNY Mellon survey believe artificial intelligence will completely revolutionise fund management over the next 10 years, writes Amin Rajan.
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