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US Treasury yields rose by 2-3bp across the curve this morning after US markets were closed on Monday on account of Labor Day. There was no economic data release with US CDS and equity markets also closed.
European equity markets were marginally lower on Monday. In credit markets, European main CDS spreads were tighter by 0.5bp with crossover spreads tightening 4.4bp. Asian equity markets have opened lower this morning while Asia ex-Japan CDS spreads tightened by 4.1bp yesterday. It’s a busy day for the Asian primary markets with eight new bond deals launched this morning.
Floating Rate Bonds are also known as floaters or FRNs (floating rate notes). These are bonds with a variable interest rate unlike fixed rate bonds. Floaters are considered attractive for investors in a rising interest rate environment since the interest rate/coupon gets re-adjusted periodically (semi-annually/quarterly etc.), linked to benchmark rates such as SOFR or LIBOR.
On Higher-for-Longer Mantra Starting to Weigh on Emerging Debt
Jon Harrison, MD for EM macro strategy at GlobalData TS Lombard
“The inflation outlook for emerging markets is becoming less certain, in contrast to the broad-based disinflation of the past four-to-five months… local-currency bonds could also be at risk in the coming months from a further surge in the dollar or more Fed rate hikes, but we are not at that point yet”
Duncan Tan, a currency and rates strategist at DBS Bank
“Across regional Asian swap markets, the front-end of curves have gone from unwinding the pricing of rate cuts to now pricing up to a 25bp increase by year-end”
Jeff Rosenberg, PM at BlacRock
“It is about restrictive policy for longer, not higher for longer
On IMF Having ‘Strong’ Partnership With China – IMF MD, Kristalina Georgieva
“I’m grateful to China for recognizing the role of the IMF at the center of the global financial safety net”… have a “strong partnership”… “In a world where so many countries are vulnerable to the impact of the Covid and world shocks, it is critical that the IMF has the financial strength to help”
On Cutting US Recession Chances to 15% on Improved Inflation – Goldman Sachs
“Real disposable income looks set to reaccelerate in 2024 on the back of continued solid job growth and rising real wages… strongly disagree with the notion that a growing drag from the ‘long and variable lags’ of monetary policy will push the economy toward recession.”