The US Treasury (UST) market grinded higher in August. Rising tensions in the Korean peninsula and a lack of direction from the US Federal Reserve and the European Central Bank on the outlook for monetary policy put pressure on US Treasury yields.
US Treasury (UST) yields ended largely unchanged in July following soft US inflation print, dovish comments from the Federal Reserve and expectations of an autumn policy shift from the European Central Bank. Overall, 10-year UST yields ended the month at 2.30%, about 0.9 basis points (bps) lower compared to the previous month.
US Treasury (UST) yields were range-bound for the most part of June, before surging in the last few days of the month. The US Federal Reserve (Fed) raised interest rates by 25 basis points (bps), despite soft inflation data. Overall, 10-year UST yields ended the month at 2.30%, about 10 bps higher compared to the previous month.
Better-than-expected US non-farm payroll figures and a more favourable FOMC statement were offset by political uncertainties in Washington. FBI director James Comey's firing and investigations into possible ties between Trump's election campaign and Russia increased concerns of a set-back in the president's economic agenda. 10-year UST yields ended the month at 2.20%, about 8 basis points (bps) lower compared to end-April levels.
The European Central Bank (ECB) has taken its first step towards reducing its stimulus programme by omitting the mention of "lower levels" for interest rates in its forward guidance, even as ECB President Mario Draghi denied that there was any discussion of tapering in the latest policy session.
Asia Credit is significant enough as an asset class to be considered separately, and its high grade segment could be a relative safe haven if EMD flows reverse.
On 19 May 2017, S&P upgraded Indonesia’ sovereign rating to BBB- with a stable outlook from BB+ with a positive outlook. In the longer term, the market is expecting that this rating upgrade will result in inflows of as much as USD 5bn into the bond market, particularly from Japanese investors who require a full investment grade rating from the three rating agencies.
10-year US Treasury (UST) yields ended the month at 2.28%, about 11 basis points (bps) lower compared to end-March levels. Mixed economic data and rising geopolitical tensions drove sentiment over the month. Towards the month-end, market sentiment improved after pro-euro French presidential candidate Emmanuel Macron secured the most number of votes in the first round of elections.
US Treasury (UST) yields rose in the first half of the month buoyed by hawkish comments from the Federal Reserve (Fed), a solid US jobs report and possible scale back of quantitative easing (QE) by the European Central Bank (ECB). While the Fed raised short-term interest rates, as expected, the absence of a more hawkish tone from the central bank triggered a drop in UST yields.
US Treasury (UST) yields traded in a tight range in February. Risk assets rallied and UST yields rose in the first half of the month, on the back of the prospect of tax cuts and a Dodd-Frank overhaul in the US. Subsequently, yields were pressured lower by concerns about a possible victory by Marine Le Pen in France’s presidential elections. Overall, the 2-year and 10-year points on the UST curve ended the month about 6 basis points (bps) higher and 6bps lower respectively.
US Treasury (UST) yields ended higher in January as weaker-than-expected payroll data led markets to moderate their forecasts for Federal Reserve (Fed) rate hikes in 2017. Overall, 2-year and 10-year UST yields rose about 2 and 1 basis points (bps) respectively in the month.
Credit markets are expected to have another positive year. We expect economic growth in Asia to be stable but see some potential downside risks. In Europe, political risk remains high for 2017. Some of our key themes are: hybrid bonds, financials, oil/emerging markets and High Yield.
Economic growth in Asia is expected to remain broadly stable in 2017. While there will be greater external uncertainties as well as country-specific challenges, Asian economies are, on balance, better equipped to deal with external pressures compared to a few years back.
USTs weakened further in December, as caution prevailed following the November sell-off. As widely expected, the US Federal Reserve (Fed) raised interest rates by 25 basis points (bps). 10-year UST yields ended the month at 2.44%, about 6 basis points (bps) higher compared to end-November levels.
We are currently in a position where we are facing more questions than answers regarding Trump's policy stance as he comes into office and how it will affect the market.
UST yields surged in the month as Trump's election victory prompted expectations of a significant fiscal package and possible upside inflation risk under the new administration.
October was another difficult month for Global credit markets, in particular for Investment Grade bonds. By contrast, more risky High Yield bonds outperformed. In terms of sector results, financial issuers outperformed.
USTs ended lower in October. Better US economic data and a hawkish statement from the Federal Open Market Committee (FOMC) bolstered expectations of a December interest rate hike. 10-year UST yields rose about 23 basis points (bps) to 1.83%.
USTs ended September mixed. While the Federal Reserve left interest rates unchanged and the Bank of Japan reinforced commitment to monetary easing, the ECB's lack of new stimulus disappointed the market.
Central bank policy from the US, Japan and Europe are strongly affecting the current global fixed income markets. New Zealand and Canadian economies also face continued pressure. We maintain the view that there is a positive environment for emerging markets, but have moved slightly more cautious.