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  • IGM Credit, IGM FX and Rates

    China Insight: Bond Inflows Pick Up Amid Weak Economy

    China Insight

    As Emerging Markets go into recession, EM policymakers have rapidly deployed a broad range of support measures with more to come, but it remains to be seen how effective these will be in mitigating the EM growth hit. As far as China is concerned, negative GDP growth in Q1 looks unavoidable. The most pessimistic estimate in the street is -9%. For the full-year GDP growth, the revised estimates in the street fall between +1% and +4%. In light of the gloomy economic outlook, Beijing definitely will step up stimulus. Now a cut in the benchmark deposit rate is on the cards, which could be a more meaningful means to boost retail consumption. With interest rates trending downward, onshore government bonds and policy bank bonds have kept rallying recently on the back of strong buy-and-hold demand (chart 1). The latest data suggests the China bond market saw USD11bn of net inflows from foreign investors in February, up from only USD2bn in January (chart 2). Among the paper which is already or being included in the major global government bond indices, policy bank bonds (PBBs) registered a bigger increase in foreign investors' portfolios than China Government Bonds (CGBs). Of the USD11bn of net inflows in February, USD5bn was taken by PBBs, USD4bn by CGBs with the remainder by negotiable certificates of deposit (NCDs) and medium-term notes (MTNs).      

    Topic Industry News

  • EPFR Fund Flows

    Flight to cash continues unabated going into final week of March

    Global Navigator

    EPFR-tracked US Money Market Funds absorbed a record-setting $254 billion during the week ending March 25 as panicked investors liquidated their holdings in both Equity and Bond Funds and moved as near to cash as they could reasonably get. With the number of confirmed cases of COVID-19 exceeding 500,000 globally, redemptions from all Equity Funds hit a 68-week high while Bond Funds followed up last week’s record outflow by posting an even bigger number.

    Topic Industry News

  • EPFR Fund Flows

    Quants Corner - Money Market Fund flows: Fear is not their only signal

    Quant Corner

    With the impact of the COVID-19 virus on day-to-day life and the global economy growing by leaps and bounds, fund flows are reflecting the biggest flight to safety by investors since the financial crisis in 2007-08.  

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: What Does Recent IRS Curve Steepening Imply?

    China Insight

    China's activity growth data for February were much weaker than expected, suggesting there is a very good chance the Q1 GDP y/y will fall into negative territory. Among forecasts from major investment banks, the most pessimistic ones for China's Q1 growth y/y are now in the -7/-9% range instead of +2/+3% territory seen a month ago, while that for the 2020 full-year growth are in the +1/+3% area rather than +4/+5%. To avoid the economy worsening further in the aftermath of the COVID-19 outbreak, Beijing inevitably has to ramp up fiscal spending substantially over the rest of the year. Given the postponement of the National People’s Congress (NPC) meeting which was initially scheduled for early March, we so far have no official data on how much the government will spend in 2020. However, with the onshore CNY IRS curve steepening sharply recently (chart 1), we doubt the potential increase in government expenditure will be small. Meanwhile, we reckon most (if not all) of the extra spending will be financed by the issuance of special bonds, in particular, the long-term ones. As per chart 2, special bond issuance increased substantially in Jan and Feb, which may be setting a trend for most of the year.      

    Topic Industry News

  • PSN Enterprise - Separate Account Analytics Software, Zephyr...

    Ryan Nauman's Weekly Recap 03.23.20

    Ryan Nauman's Weekly Recap

    With expectations for a U.S. recession in 2020 running high, one has to believe that bad economic data is priced into markets. We will continue to get more and more economic data releases that miss big on the downside. However, these misses will not come as a surprise, as most market participants are expecting the worst. Investors will continue to focus more on monetary and fiscal policy when determining their investment strategies rather then economic data that is expected to be very soft. Read more from Ryan Nauman's Weekly Recap and subscribe to have it delivered to your inbox each week!

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    The Context 03.23.20

    The Context

    Read more from The Context and subscribe to have it delivered to your inbox each week!

    Topic Industry News

  • EPFR Fund Flows

    Quants Corner - Knowing when to jump: risk management in extraordinary times - Crossing to safety in extraordinary market conditions

    Quant Corner

    What had been a relatively measured response to the coronavirus outbreak that started in China around the New Year became an increasingly disorderly stampede for the exits in late February. As COVID-19 spread across the globe, US stock market took a series of hits culminating in a 7% drop on March 6 that triggered the so-called “circuit breaker” – suspension of trading – for only the third time since its adoption.  

    Topic Industry News

  • LendersBenchmark™ - Financial Lending Analytics

    Rutger Responds: Importance of Actionable Insights in Uncertain Times

    Rutger Responds

    Rutger Responds: Importance of Actionable Insights in Uncertain Times The COVID-19 virus is spreading and everyone is looking to understand how this will impact their business and their customer’s lives. As things change in a rapid pace, and will continue to change over the foreseeable future, having access to market insights will help your financial institution to make crucial decisions.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Bullish on CGBs as RRR Cut in Sight

    China Insight

    Chinese Premier Li Keqiang held a State Council meeting on 11 March. Two key signals were released there: Speed up credit supply to industries and enterprises. Implement targeted cuts in reserve requirement ratios (RRRs) The signals are very clear, so we will see further liquidity loosening in mainland China in the near term. We expect a targeted RRR cut will be announced very soon. Needless to say, further reduction of loan prime rates (LPRs) will also happen at the regular fixing on 20 March. In regard to the China government bond (CGB) trading strategy under the prevailing environment, we here reiterate our bullish view.      

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    The Context 03.16.20

    The Context

    Read more from The Context and subscribe to have it delivered to your inbox each week!

    Topic Industry News

  • EPFR Fund Flows

    Flow records fall in early March but investors still looking for entry points

    Global Navigator

    The dominant theme for the week ending March 11 – flight to safety – was writ large in the fund flow data as the COVID-19 virus continued to spread and oil producers found themselves in a price war. EPFR-tracked Money Market Funds posted a new inflow record, flows into US and Japan Equity Funds hit five and eight-week highs respectively and commitments to Gold Funds hit their highest level since late 3Q19. Meanwhile Europe, Emerging Markets and Total Return Bond Funds experienced record-setting redemptions, as did all Bond Funds, while outflows from High Yield Bond Funds were the biggest since mid-3Q14 and second largest on record. Fear, however, was not the only theme influencing flows. Yield hunger drove fresh money into Dividend Equity Funds, Brazil’s reform story pulled another $530 million into Brazil Equity Funds and funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates comfortably extended an inflow streak stretching back to late 4Q18. “Investors are also gravitating towards markets with reputations for social cohesion and the capacity for decisive action,” observed EPFR Research Director Cameron Brandt. “This week we saw positive flows for Norway, South Korea, Singapore, Australia, France, UK, Japan, Netherlands, Hong Kong, Russia and Taiwan Equity Funds.” Overall, the second week of March saw $25.8 billion flow out of all Bond Funds, $6.3 billion from Balanced Funds, $4.7 billion from Equity Funds and $1.3 billion from Alternative Funds while Money Market Funds took in over $135 billion.

    Topic Industry News

  • PSN Enterprise - Separate Account Analytics Software, Zephyr...

    Ryan Nauman's Weekly Recap 03.09.20

    Ryan Nauman's Weekly Recap

    Economic data takes center stage with the Q4 earnings season coming to a close and with most eyes on the warnings for forward earnings, or the lack thereof, in the wake of the uncertain coronavirus. The inflation prints will be widely watched as supply shocks tend to be inflationary, however, expectations are for inflation to remain muted. Additionally, the consumer sentiment readings will be more telling as the data will correspond more closely to the coronavirus outbreak. Finally, don’t be surprised if we see some data misses as we move forward with economic data that captures the same period as the outbreak. Read more from Ryan Nauman's Weekly Recap and subscribe to have it delivered to your inbox each week!

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    The Context 03.09.20

    The Context

    The JPY Week - Bias is Bullish Crazy times and a possible/likely crazy trading range… Euro Corp Snapshot: Investors Still Sweet on Corp Bonds Despite Volatility With markets set to remain volatile as the world tries to contain the coronavirus outbreak, it is perhaps wise to expect a measured week for issuance. That said, as shown by last week's trades, investors appear to still have plenty of cash. More Monetary Easing Eyed as Coronavirus Further Dampens Brazil's Recovery Prospects Bets that Latin America's largest economy would finally take off this year have been eroded by a string of poor economic indicators for Q4.

    Topic Industry News

  • EPFR Fund Flows

    Angst over COVID-19 spreads to fixed income fund groups

    Global Navigator

    EPFR-tracked Bond Funds were swept up in the broad correction that hit most fund groups in late February, posting their first weekly outflow in over a year during the seven days ending March 4, as fears about the Wuhan coronavirus (Covid-19) continued to pummel asset classes ranging from oil to junk bonds. Flows into Money Market Funds climbed to a 30-week high while redemptions from Bank Loan and Total Return Bond Funds hit levels last seen in 4Q18, over $7 billion flowed out of High Yield Bond Funds and Balanced Bond Funds set a new outflow record. Daily data did show flows for several major groups rebounding after the US Federal Reserve’s 50 basis points interest rate cut and Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates showed their customary resilience. Several fund groups – which did not include US Equity Funds – also benefited from safe-haven flows, and the reform story offered by Latin America’s largest economy kept fresh money flowing into Brazil Equity Funds.

    Topic Industry News

  • EPFR Fund Flows

    Quants Corner - The cure for the coronavirus? Investors think it is ESG

    Quant Corner

    With the coronavirus that originated in China renamed COVID-19 and spreading briskly, the final week of February was a brutal one for global markets. Benchmark equity indexes racked up daily losses at a rate last seen at the height of the 2008-09 financial crisis.  

    Topic Industry News

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