Since the early 2000’s the name ‘Mrs. Watanabe’ has been used to describe yield seeking Japanese retail investors, who were forced to increase their offshore investment risk taking in response to ultra-low interest rates back home.
How is it that traditional safe haven assets like gold, government bonds and the Japanese yen are all performing strongly this year, just as risky assets like equities, credit and emerging markets are also doing very well?
Following the sharp sell-off in Q4 2018, credit markets globally have performed strongly in 2019. Having seen a big dip, followed by a quick rebound, how are we now left?
Liquidity is one of those things that doesn’t get much focus until it’s too late.
In this article, we will discuss five key risks to fixed income markets for FY20 and explain their relevance to those allocating to fixed income investments.
2019 has so far been a stellar year for bond returns globally. Even a simple passive exposure to long dated bonds has delivered handsome profits that far exceed the average yield of those bonds.
Hedonic adaptation is a psychology term that describes the human tendency of reverting to a relatively stable or ‘normal’ state following either positive or negative life changes.
And it’s what’s driving the disconnect between bond and equity performance in 2019.
Despite bond yields in many markets getting vanishingly low, inflows to bond funds globally have actually accelerated this year.
Recent inflation readings in Australia and the US have reinforced the strong consensus view that inflation will remain very low for a long time.