skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

IFI_Monthly_Interest_Rate_Outlook_-_February_2018.pdf

Please find attached the February 2018 edition of the IGM Monthly Interest Rate Outlook.

Highlights:

Bond yields are on the way up ... BEIRs and therefore inflation expectations have played a major role in some markets ... which as Senior Editor/Analyst Marcus Dewsnap suggests is a significant reason for the interest rate expectations shift priced-in by markets via OIS curves [Pages 2-5]

  • Technical Analysis is also supportive of the higher sovereign yield story [Pages 20,21, 22,23] with European FI TA Chief Ed Blake indicating significant moves are afoot in Europe [Page 6]
  • A major OIS mover is in the Eurozone, but NOT because of an inflation expectations shift for this year at least [Pages 2-5] � maybe it's that growth thing � but as European Fixed Income Manager Alvin Baker writes, 'all told, despite the Euro front-running some further stimulus withdrawal/policy action, 2-10 year yields do NOT fully reflect a risk premia for quicker normalisation. Post ECB, the 5-year Bobl reached 0% - an important milestone if that can turn positive and stay above that level' [Pages 8-9].
  • Meanwhile, the CNB tightened once more in January, and it is almost certain to do so again � although Emerging Markets Managing Analyst Chris Shiells suggests that given current forecasts, only one more hike this year [Pages 6, 13].
  • In China, the PBoC's removal of the counter-cyclical factor mechanism in January finalises the abolition of measures introduced in August 2015 to defend the Cny. As Tim Cheung, IGM Head of China, writes (Page 16), faded capital outflow pressures combined with improved FX reserves outlook plus a solid recovery of GDP growth not only justifies this, it also suggests it is time for FX rate normalization.

Recommended Articles

  • IGM Credit, IGM FX and Rates

    China Insight: More Small Banks in Trouble as Re-leveraging Underway

    By Tim Cheung 19 Nov 2019

    The health of China's smaller banks has come under pressure as Yichuan Rural Commercial Bank and Yingkou Coastal bank are said to have suffered bank runs in recent weeks amid fears over poor management and liquidity issues. Earlier this year, a rare government takeover of Baoshang Bank and a state rescue of Jinzhou Bank and Hengfeng Bank raised concerns about the underlying health of hundreds of small banks in China. Admittedly, China has entered another round of re-leveraging, albeit a softer one this time. With the fundamental issue of macro leverage unsolved, we expect China's debt-to-GDP ratio, currently in the 290-300% area, to reach 320% by 2025 (chart 1).  

    Topics Industry News

  • IGM Credit, IGM FX and Rates

    The Context 11.18.19

    18 Nov 2019

    Inside this week’s edition of The Context, Financial Intelligence thought leaders discuss: Brl/Mxn Corrects Lower, But Still See Mxn Underperformance in Medium-term Due to Mexico's challenging GDP growth outlook, the reduction of the real rate and lingering risk of credit rating downgrades, we still see scope for Mxn underperformance in the medium-term. Whilst the Brl rally has paused, and for good reason, the arguments we presented for Brazilian economic outperformance remain. Euro Corp Comment: Issuance Slows But it Remains a Seller’s Market It was another active week for the European corporate bond market where another EUR7.455bn printed in the single currency courtesy of eleven issuers (13 tranches). Whilst being a decent total, it did however mark a considerable slowdown from the jumbo EUR11.25bn that hit the tape the week prior. What remained constant though was that there remained plenty of cash directed toward new corporate offerings… The CAD Week - Bias is Neutral to Bearish We get some major releases this week out of Canada, with manufacturing sales, CPI and retail sales being released on Tue, Wed and Fri respectively, but ultimately the most influential topic for the BoC is the ongoing trade war and its effect on domestic industry. Read more from The Context and subscribe to have it delivered to your inbox each week!

    Topics Industry News

  • FX & rates insights, IGM FX and Rates

    IGM FX Case Study: Banking and Financial Service Provider

    13 Nov 2019

    Our main sponsor (referred to throughout as ‘MP’), a Senior VP, Sales FX used IGM’s service 12 years prior to moving to BFSP. His initial hesitancy on sourcing economic data from an external data provider was alleviated once he sampled IGM as an intelligence source. Working in a fast-paced environment such as foreign exchange, requires concise, relevant content and IGM’s services were a perfect fit for our main sponsor and his team for day to-day requirements. IGM’s daily information alerts allowed team members to keep abreast of global news in what MP termed, ‘short and sharp content, which can be read 15 minutes prior to the start of a working day, whilst providing a good understanding of the current market’. Read more...

    Topics Industry News

;

Any questions? Speak to a specialist

Would you like to request sample data or analysis from Informa Financial Intelligence? 

See how our tailored solutions can help you gain a competitive advantage: