Expect Business as Usual After the German Election

Many pundits believe the German federal election on September 22 will prove a turning point in the sovereign debt-crisis. We are less convinced.

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ECB’s Attitude to Portugal Raises Questions about Bond-Purchase Programme

Political upheaval in Portugal has thrown the spotlight on the European Central Bank’s (ECB’s) bond-purchase programme, known as Outright Monetary Transactions (OMTs). Many are asking whether the ECB is ready to support the market if yields rise further. And if not, why not?

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Will Carney Light Fireworks at Bank of England?

On July 1, former Bank of Canada governor Mark Carney will replace Sir Mervyn King as governor of the Bank of England. For many observers, this will herald a new dawn in the conduct of British monetary policy. We agree, but think the process will be more evolutionary than revolutionary.

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Finding Healthy Stocks in Europe’s Troubled Landscape

European equity markets continue to face severe stress as the continent struggles to contain fallout from the sovereign-debt crisis. Yet this seemingly toxic environment is creating some exceptional investment opportunities in relatively healthy companies that can control their own destinies.

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Should Euro-Area Exporters Worry About a Weaker Yen?

Darren Williams (pictured) and Guy Bruten As the yen continues to plummet, exporters around the world are growing concerned that Japanese rivals may gain a competitive advantage. But our analysis suggests that the euro-area economy may not be quite as vulnerable as widely perceived. 

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Euro High Yield: Defaults Are Not the Biggest Concern

High-yield default rates have been unusually low over the past couple of years and now look as though they are on the cusp of a reversal. But default rates in themselves could be less damaging to high-yield bond returns than rising government bond yields.

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Likely Rate Cut from the European Central Bank Will Be No Magic Wand

Disappointing April data suggest that the ECB is set to cut the refinancing rate at Thursday’s Council meeting. This is likely to have limited economic impact but  could encourage expectations of more creative policy action later, helping to take some upward pressure off the euro.

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Cyprus Averts Disaster, but the Price is High

The European Union’s last-minute deal with Cyprus has headed off bankruptcy for now, but comes at a heavy price for uninsured bank depositors. Meanwhile, the move to impose losses on private creditors and growing complacency among policymakers could be storing up trouble for the future.

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Little Cyprus Sparks Big Contagion Fears

The situation in Cyprus is still very fluid and very serious—perhaps more so than in Greece last year. While the country may be too small to have a meaningful direct impact on the rest of the euro area, the big issue for markets is the potential for contagion to more systemically important countries.

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Don’t Be Afraid of European High Yield…
Be Selective

The European financial crisis continues to challenge high-yield investors. Some were wary of Europe’s issues and stepped away last year, only to see European bonds dominate through the unpredictability. Others want in now, but worry that they’ve missed the rally.

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