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bonds

Japan’s Government Bond Yields Pressured Higher as BOJ Quietly Trims Purchases of Longer-Term Maturities

JGB’s Join the Higher Bond Yield March with a Bout of Bear Steepening Concentrated at the Long End The risk/reward prospects of owning longer-dated government bonds from current historically suppressed levels are as attractive as a bucket of dry sand after a sweaty jog. As Bloomberg notes, Japan’s bond market is enduring pressure due to recent BOJ policy adjustments. Japan […]

bonds

Still No Reason to Jump Back Into IG Bonds

Total return on US investment grade (IG) corporate bonds has been negative all year. Half of IG bonds are rated BBB, which is one notch above junk. Deteriorating corporate credit conditions and upside inflation surprises suggest a poor risk/reward for incremental capital allocated to US IG bonds. This chart can be found here:

currencies

The Cost of Maintaining a Currency Peg

Hong Kong needs to mimic the US in raising short-term interest rates in order to maintain the currency peg with USD. This is causing strain on the Hong Kong economy as exemplified by 3m HIBOR climbing more briskly than it would independent of the peg. Some of the world’s most sky-high real estate prices are rolling over. This will accelerate […]