7 Insights with Topic: USD
Asia ex-Japan investment grade credits should continue to outperform their global peers in 2025, amidst risks in the US of a continued rise in US Treasury yields, at a time when corporate credit spreads in the US are already at cyclical lows. On the other hand, Asia ex-Japan credits will likely be supported by a combination of monetary easing, shorter duration, the offer of significant yield pickups, credit upgrades and likely lower issuance. Further to Part 1 and Part 3 of our 2025 outlook which dealt with the US and ASEAN market outlook, in this article we discuss how Asia ex-Japan US Dollar Investment Grade Credits (using JACI IG as the investment universe) generate allocation alpha in a complex landscape dominated by concerns over economic uncertainties in the U.S – about its fiscal outlook, a resurgence in inflation, rapidly rising government debt and the impact of radical policy plans.
Jan 27, 2025
As the US Fed rate cut gets imminent, the liquid Asia credit market also is set to benefit from a number of strong tailwinds. In addition to favourable macroeconomic fundamentals, the heterogenous region also offers benefits of broad geographic diversification benefits and positive reinforcement from continued market liberalization and more investor friendly reforms. Within this space, Asian investment grade (IG) bonds also enter a favourable “Goldilocks” scenario in particular, represent a sweet spot that international allocators sometimes overlook, offering meaningfully higher yields, better credit ratings, and shorter duration than their peer IG cohorts from the US and Europe.
Sep 16, 2024
The American dilemma – recession by policy tightening or stagflation by policy avoidance. US GDP growth is running so low now that a recession is a very high probability event within 12 months as rates rise further. The drivers of that coming recession will be both inflation and higher rates: There can be many different variations of the balance between the pace of rate hikes and the pace of inflation. As US economic growth slows further in coming months, the US Federal Reserve will be tormented over the awful choice between the longer-term impact of inflation and the more immediate risk of recession. Yet in the end, if rate hikes do not crush US economic growth, inflation will eventually do the same, albeit with a greater lag. In this article, our Senior Advisor Say Boon Lim explains why bounces in US equities are likely to be “get out of jail” cards, with lower lows and lower highs the most likely outcome.
Jun 29, 2022
The US Federal Reserve has signalled the imminent start of the transition from the Great Stimulus of 2020-2021 to a period with new uncertainties. The Fed’s suggested pace of tapering quantitative easing was at the high end of expectations. In this article our Senior Advisor Say Boon Lim discusses his thoughts on what to expect regarding US inflation rate and 10Y UST yield, and why we need to brace for more challenging US equity and bond markets with lower return and higher risk coming up on the horizon.
Oct 05, 2021
Amidst the high risk of holding Developed Market government bonds and credits in an environment of rising inflation and historically low spreads, a frequent lament among institutions and large family offices is “but our mandate requires us to hold bonds.”
Jun 17, 2021
To summarize the year of 2020, the opening lines from Charles Dicken’s A Tale of twin cities sounds like an accurate description. It was certainly the best of times and the worst of times. Global equities have been doing reasonably well with developed market up by 12.0% and emerging market up by 11.7%. Fixed income managed to gain by 7.4% whilst gold price was up by 19.1%. On the other hand, real economy has been suffering from the pandemic with almost all major economies getting into recession. International Monetary Fund sees the world would contract by 4.4% in total output, the worst crisis since the 1930s Great Depression with -5.8% among advanced economies and -3.3% on developing countries.
Dec 02, 2020
An overdue technical rebound in the US Dollar – which started a week ago – may give investors an opportunity to diversify their currency holdings away from the Greenback. What is emerging could well turn out to be a counter-trend rally in a bigger, multi-year Dollar decline.
Sep 09, 2020