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U.S. Treasury Inflation-Protected Securities, or TIPS, stand out as a distinctive class of U.S. government bonds meticulously crafted to shield investors from the corrosive effects of inflation. While the value of traditional bonds gradually erodes due to inflation, TIPS promise a different path. Their value adjusts in harmony with the Consumer Price Index (CPI).
An opportunity or a threat? The US Treasuries market presents both challenges and opportunities for investors. Focusing on the belly of the yield curve offers attractive entry points with historically high real yields.
The UBS/Credit Suisse affair has caused the AT1/CoCo bond markets to struggle By tightening their monetary policy sharply and rapidly, central banks have highlighted certain weaknesses in our financial system: insufficient risk coverage, liquidity problems, lack of business diversification, governance issues, and now uncertainties in the treatment of hybrid instruments. After the failure of some US regional banks, the UBS/Credit Suisse affair has shaken the financial world and more particularly the specialists of a specific bond segment which weighs about 250 billion dollars: Additional Tier 1 bonds (AT1) and/or Contingent Convertible bonds (CoCos).
Like the FED last week, the ECB’s official statement met market expectations but the press conference suprised.
Instability in EMs means sovereign bonds are subject to pain in the short term.
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