TSS - Major Markets Report, June 2015

by Michael J. Howell19. June 2015 15:34

The major change in the last few weeks has been a pick-up in Global Liquidity conditions, driven largely by Emerging Markets and notably China. China is large, accounting now for one quarter of Global Liquidity. The three-year monetary squeeze by the PBoC can explain the drop in our GLI™ (Global Liquidity Index) through 2014 and the consequent sharp outperformance of bonds. This is now reversing as Chinese Liquidity levels rise, forcing up over-extended (on the downside) bond term premia. On top, the Eurozone continues to pump in cash, thereby improving the outlook for risk assets, but souring prospects for ‘safe asset’ like bonds.


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