Local Bonds Are All the Rage in EM as Investors Buy Up ETFs

Federal Reserve’s dovish stance and US – China trade talks have increased demand for Emerging Market Local Government Debt Source: Bloomberg If investors wanted evidence that demand for local-currency bonds isn’t fleeting, here it is: The biggest exchange-traded fund tracking local debt in emerging markets has seen 17 weeks of inflows. The $9.7 billion iShares…

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Bond Buyer Matching AI

Over the past two years, we have witnessed profound changes in the fixed income marketplace with counterparties increasingly adopting quantitative investing and liquidity risk monitoring techniques. These include adoption of new methods of analysis such as AI analytics like COBI-Matching algorithm. Source: Overbond Fixed Income Artificial Intelligence The financial services market is embracing digital processes…

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RBC Prepares to Blaze Trail With New Bail-In Eligible Bonds

RBC building

The Royal Bank of Canada will be the first Canadian financial institution to sell bail-in eligible securities. The bail-in eligible securities can be converted into equity should a bank get into trouble and will eventually replace deposit notes for Canadian banks. Source: Bloomberg Royal Bank of Canada is getting ready to sell the country’s first…

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As Markets Plummet, Go-Anywhere Bond Funds Rise to the Occasion

 As interest rates have continued to climb today’s bearish market, the non-traditional bond funds have gained 0.6% this year.   Source: Bloomberg Created after the financial crisis to prosper on rising interest rates, the funds instead have bumped along for years amid persistently low borrowing costs. But as rates have climbed in today’s bearish market, go-anywhere bond…

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Rates are shooting higher on inflation fears, 10-year yield its highest in nearly 4 years

 The yield on the benchmark 10-year Treasury note surged to 2.727 percent on Monday, its highest since April 2014, as investors bet on an accelerating economy and inflation. Source: CNBC A falling dollar this month has also helped drive yields higher, as traders worry it may reduce the appetite for Treasurys, while also boosting inflation. The 10-year yield…

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Bond bear market? Not if pension funds can help it

 Pension funds are in bonds for the long haul, and aren’t swayed by weekly or monthly price fluctuations. Source: The Globe and Mail The death of the bond market bull run has been greatly exaggerated. The life-savers are pension funds, whose demand for long-term fixed income assets could reach record levels this year – and, counterintuitively,…

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Watch the bond market, not equities

 Despite the US Federal Reserve raising rates five times this year, bond prices have stayed high which has kept the long-term yields low. Source: Financial Times The head of a leading western central bank predicted that his job would soon be akin to flying a plane. The goal was to deliver such a smooth glide path…

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