The tide turns

Old assumptions on the traditional link between emerging market debt and the greenback are being challenged, writes Liam Spillane.

How we frame things deeply affects how we process information and subsequently act on it. So much so that, despite convincing evidence to the contrary, it can be extremely hard to shake off a fabled preconception. It seems that once a label sticks it can be very hard to dislodge.

Almost a decade on from the sovereign debt crisis, we explore whether the euro zone’s peripheral economies have materially improved or old vulnerabilities will again become apparent as growth slows.

Trade wars have disrupted supply chains and weighed on stock performance in emerging markets. But as manufacturing companies shift production away from China to evade tariffs, some of its neighbours are thriving.

Financial markets have surged since the start of the year after central banks appeared to put monetary policy tightening on hold. Our investment teams give their views on where monetary policy goes next and what that means for asset prices.

Annegret Kramp-Karrenbauer has replaced Angela Merkel as leader of Germany’s ruling CDU party, and may soon take her place as chancellor. What does this mean for Germany – and Europe?

The long-awaited shift in monetary policy appears to be resulting in a new volatility paradigm. That could have adverse consequences for US corporate bonds even if economic data holds firm, argues Joubeen Hurren.

Our fund managers in government, corporate and emerging market bonds look at potential drivers of bond markets in 2019.

The Italian government’s plans to sharply hike spending leave it on a collision course with the EU. But financial markets, as well as Brussels, will determine whether the populists in Rome can deliver on their electoral pledges.

The recent Annual Meeting of the IMF reinforced that EM debt investors should pay extra attention to countries’ individual circumstances, write Aaron Grehan and Carmen Altenkirch.

With emerging market assets under pressure on the back of rising US interest rates, a strong dollar and an escalating trade war between the US and China, our equity and bond teams give their opinion on areas to avoid and where pockets of value are emerging.

A sound portfolio construction process is critical to avoiding the pitfalls of behavioural biases, which will become all too apparent as the credit cycle turns