The emergency airdrop of fiscal and monetary support provided to fight back in the battle against the coronavirus impact on the global economy continues to prevent further dives in world markets.
The Big Question on coronavirus
While valuations in emerging bond markets may look fairer after solid performance in 2019, we believe various factors remain supportive to the outlook.
Manager increases funds' sterling weighting
Underweight GBP and EUR
2019 was marked by US dollar appreciation
Ahead of 'phase one' agreement
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New report on Long Term Capital Market Assumptions
The US dollar has performed well, up more than 7% since the end of 2017, and continues to enjoy a number of supports.
Hard currency (HC) and local currency (LC) emerging market debt (EMD) have already delivered 13% and 10.3% this year respectively.
Most fixed income has performed well in 2019 aided by the change in outlook from many central banks around the world and the gross redemption yield (GRY) on many bonds have fallen to very low or negative levels.
Safe‑haven status of the dollar remains intact
Pound hovering over $1.23 region amid Brexit fears
Brexit taking its toll on sterling
Pound hit by Parliament shutdown plans
We believe the move of US dollar/Chinese renminbi above seven during early August is symbolic, and the country has explained it is in response to the US-imposed tariffs on Chinese goods.
Look ahead to the next three months
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Record high debt-to-GDP ratio no issue for bullish managers