Search

The article discusses two separate research papers. The first paper examines the factors that influence changes in household asset allocation patterns, finding that three factors (long-term equity risk premium, credit premium, and municipal bond premium) explain 81% of the variation in rebalancing across asset classes. The second paper analyzes the impact of central bank announcements on interest rates and exchange rates during the COVID-19 pandemic. It finds that "whatever-it-takes" announcements had a greater effect on lowering bond yields compared to size-limited announcements, and that open-ended announcements had a significant impact on longer-term yields. The researchers caution that central banks cannot solely rely on whatever-it-takes policies in future crises. Additionally, the article briefly mentions another research paper that examines the effects of increased immigration enforcement on public safety, specifically among Hispanics. The study finds that the Secure Communities program led to a decrease in crime reporting among Hispanics and an increase in victimization rates. [Extracted from the article]

The European Central Bank (ECB) has announced stricter climate targets for its bond portfolio, signaling its intention to take action against companies that do not meet climate pledges. The ECB's Governing Council will set interim emission-reduction targets for its corporate portfolios, using the EU's climate benchmarks legislation as a guide. The ECB is taking a more proactive approach to addressing climate change compared to other major central banks. The announced targets will be used to track progress, and potential remedial actions will be considered on a case-by-case basis. The ECB has also expanded the scope of assets subject to a climate review, including public sector assets, covered bonds, and foreign reserves. The ECB's assessment shows a decline in emissions for corporate assets and other assets, excluding value chain emissions. Rising prices and inflation have had a positive impact on issuers' carbon efficiency. The ECB will work with standard-setting bodies to address the lack of a methodology for accounting for inflation. [Extracted from the article]

The European Central Bank (ECB) is taking steps to reduce the carbon footprint of its bond portfolio as part of its efforts to make its monetary policy more environmentally friendly. The ECB has stated that issuers reducing their emissions have contributed to this development. Additionally, the ECB estimates that around 20% of emissions cuts in 2022 and 2023 were a result of reinvesting in greener issuers. The ECB announced in 2022 that it would prioritize companies with lower pollution levels in its corporate bond portfolio, and it will now set interim emission-reduction targets for corporate sector portfolios. The ECB has also expanded the scope of its disclosures on assets held for monetary policy purposes. [Extracted from the article]

The credit markets have experienced a significant decline at the start of 2024, resulting in the loss of hundreds of billions of dollars in value. The combined value of high-grade and junk markets has decreased by $240 billion to $13.6 trillion, the lowest since December 13. This decline has been exacerbated by the rebalancing of bonds underlying the indexes at the end of last month. Credit-default swap indexes have also seen an increase in spreads, indicating higher credit risk. The reversal of the optimistic sentiment from late 2023 is due to central bankers' reluctance to cut interest rates and concerns about a potential wider conflict in the Middle East. The widening gap between global high-grade bond yields and sovereign debt further highlights doubts about rate cuts. The issuance of new corporate bonds is adding pressure to the market, as portfolio managers may have to sell old bonds to buy new ones. Despite the recent decline, the credit market's value is still higher than it was in late October. The market is expected to remain volatile until central banks confirm expectations of rate cuts. [Extracted from the article]

The credit markets have experienced a significant decline at the start of 2024, resulting in the loss of hundreds of billions of dollars in value. The combined value of high-grade and junk markets has decreased by $240 billion, erasing all gains made since December 13. Credit-default swap indexes have also risen to levels last seen in early December. This reversal of fortune follows the optimism of late 2023, when interest-rate cuts and economic growth were anticipated. However, central bankers are now hesitant to cut rates due to inflation concerns and the potential for a wider conflict in the Middle East. The market is expected to remain volatile until central banks confirm rate cuts. [Extracted from the article]

Corporate bond investors are taking advantage of high yields by purchasing new issues worldwide, anticipating potential interest-rate cuts by major central banks. Yield premiums on bonds in the Bloomberg Global Credit Corporate index tightened to their lowest level since January 2022. This trend is driven by strong US economic growth in the fourth quarter and expectations of rate cuts by central banks, which would lower yields. However, caution is advised as defaults for weaker firms are increasing and developers in many countries are under pressure. [Extracted from the article]

Corporate bond investors are purchasing new issues globally to take advantage of high yields before potential interest rate cuts by major central banks. Yield premiums on bonds in the Bloomberg Global Credit Corporate index tightened to the lowest level since January 2022. This tightening of global spreads follows better-than-expected US economic growth in the fourth quarter of 2023. However, caution is advised as defaults for weaker firms are increasing and developers in many countries are under pressure. Concerns about the Chinese economy have also affected investor sentiment towards Asian debt. [Extracted from the article]

Corporate bond market stands at its strongest point with more FIG deals expected, though higher new issue premiums eyed [ABSTRACT FROM AUTHOR]

Issuance likely to resume next week after two day break [ABSTRACT FROM AUTHOR]