Divergence between economies and financial markets has been a key macroeconomic trend over the last few years, and reflects in part the deglobalization of the worldwide supply chain. We expect the big winners to be countries and regions with large internal markets; the losers will be smaller countries which have yet to move up the export value chain. [Read More...]

It could be several weeks or a few months. But before long, the city of Detroit is likely to default on some of its outstanding bonds and possibly file for Chapter 9 bankruptcy protection. It would be a historic bankruptcy and is sure to create uncertainty in the municipal bond market. Some types of debt will fare better than others in the final restructuring. [Read More...]

Let’s not mince words: Liquidity is draining out of global corporate bond markets, and we doubt it’s coming back. But that doesn’t mean investors have to take their chips and go home. In fact, with the right approach, less liquid markets can offer some attractive opportunities. [Read More...]

European bond markets have been volatile in recent months, with high-yield financials suffering some of the worst turbulence. But we’ve seen this kind of volatility before, notably in 2008/2009. That bloodbath was followed by a highly lucrative rally.  [Read More...]

The Obama administration recently introduced its Clean Power Plan, which aims to combat US climate change. This groundbreaking project will clean the air and transform how we generate power. Will investors breathe easier as well? [Read More...]

Pension funds in Canada have long relied on a simple fixed-income strategy: buy Canadian. And for a long time, this worked wonders. But times are changing, and our research suggests that swapping a Canada-only approach for a more globalized portfolio will provide better risk-adjusted returns in the future. [Read More...]

Federal Reserve Chairman Bernanke reiterated today that a healthier economy would prompt the Fed to end its unprecedented bond-buying program, which has kept yields artificially low. Speculation on this question over the last several weeks has caused a sharp bond sell-off and rising yields. But we don’t see this as the start of a rout for most municipal bonds. [Read More...]

The S&P/ASX 200 headed higher at the open thanks to minor gains for the big four banks and hefty gains for Woodside Petroleum driven by a rally in crude oil prices. Meanwhile losses for gold have been limited by US political turmoil. [Read More...]

US Treasury bond yields have crashed to record lows in 2011. Sovereign-debt worries in Europe, concerns about the slowing economy and the Federal Reserve’s commitment to low rates have all boosted demand for Treasuries, and thus depressed their yields. Can Treasury yields really go any lower? Or should we be worried about a rapid bounce off current, historically low levels? [Read More...]

Hardly a day has gone by in 2011 without fresh headlines about the sovereign-debt woes of Greece and other developed countries. It’s still unclear which path governments will take to resolve their growing debt burdens, but one thing is clear: the path taken to fiscal rectitude will have great implications for fixed-income investors. In our view, apart from default, there are three possible ways out of a government debt crisis: growth, inflation and austerity.  [Read More...]