201709.08
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The Real Euro Watch

Everyone is now a euro watcher. The European common currency’s exchange value against the dollar has been on the rise, to put it mildly. Despite decades of declaring floating currencies the optimal framework, it really is quite entertaining to watch the furor when these things actually float one way or the other. This recent trend…

201707.26
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Dollars (TIC) In May: Consistently Inconsistent

The TIC data for May was inconsistent. It has been that way for several months, and importantly describes what I think is the operative “dollar” condition. Though the data is several months old already, we can tell by certain real-time prices and indications that the difference between 2016 and 2017 is very clear in some…

201703.20
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Baselines Matter Eventually

In a stroke of immensely fortuitous timing, India’s largest automaker Tata Motors was able to raise funds by selling bonds on offshore markets. Faced with an increasing cash crunch and unable to finance working capital needs via strictly Indian banks, the company turned to Singapore. On May 10, 2013, Tata raised S$ 350 million (Singapore…

201607.08
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Direct Line of Funding Warnings Show Up In Corporate Credit, Particularly IG

One of the consequences of last year’s junk bond blowup was, unsurprisingly, a dramatic decline in high yield gross issuance. The numbers were pretty stark. According to SIFMA, high yield gross issuance in Q1 was 60% less than Q1 2015, following Q4 which was 47% below Q4 2014. As the market has come back since…

201607.06
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The Financial Side of Hell

Back in September, the IMF issued a generic warning about EM corporate debt. The organization had estimated that total borrowing had exploded, from about $4 trillion in 2004 to $18 trillion in 2014; and perhaps even more than that. Concerns over such bloat typically focus offshore, and not without good reason. However, that understates the…

201604.25
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The Benefits Already Sparse On The Plus Side, Europe Flirts With Widespread NIRP

Unilever is a rather typical multinational conglomerate trying to weather this “recovery” as best as it can. It is, of course, quite jarring to realize that any business so positioned might have to “weather” any recovery, but that is the state that they are presented with. Reporting Q1 results last week, the company improved slightly…

201604.22
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Upping The Credit Cycle Pressure

The corporate junk bubble had gotten so beaten up and so dire that removal of the liquidation pressure was bound to attract bargain hunters and momentum chasers. Despite all that has happened, the lust for huge potential gains remains constant. Where that might have been more expressed upon the short side last year, with the…

201604.18
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A Closer Look At China’s ‘Dollar’ Gap

The focus on China and the Chinese economy is not just related to its size but more so the fact that it is the pivot point for the whole global system. In pure economic terms, as “end demand” from the developed world economies slows, the Chinese economy either absorbs that reduction (through its own internal…

201604.05
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Chart Of The Week: Corporate Bonds Go Vertical

You don’t often see a move like this in a bond market. This the long term, high grade corporate bond ETF from SPDR, up 6.6% in the last month. I chose this chart because of what it shows about modern markets, which don’t allow for much introspection on the part of investors. We’re all traders…

201603.14
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Fixed Income Review

Bond markets have made some dramatic moves over the last few weeks and I thought it an opportune time to review. Credit spreads have narrowed considerably over the last few weeks as risk takers have re-entered the markets. High yield, IG corporates and emerging market bonds have all enjoyed significant rallies. It is our judgement…