After depreciating for over 18 months, the US dollar has managed to make a comeback, recouping its 5% YTD loss in a matter of weeks. Coupled with 10 year US Treasury (UST) yields hovering around 3%, this has put pressure on Emerging Markets (EM).
As much as we would prefer to discuss market fundamentals over the trials and tribulations of the current US Administration, it has been largely unavoidable in this first quarter of 2018.
Markets continue to come to terms with the return of higher volatility, triggered ostensibly by fears of inflation and the unwinding of highly leveraged short volatility positions at the beginning of last month.
In our 2018 outlook, we made the case for rising volatility as central banks across the developed world slowly remove the stimulus punch bowl, but few would have imagined volatility spiking with such a vengeance as it did in recent weeks.
Over the past few years, one of the main risks that concerned our team was the possibility that asset classes could become positively correlated.
Could this be taper tantrum 2.0? Markets are well-conditioned to buy risk on the back of generally dovish encouragement by central bankers, but what are we to make of this new seemingly coordinated hawkish tone across the developed world?
What is the prognosis for Emerging Markets as major global central banks begin to tighten policy?
What does it mean to be a value investor? This question is all the more relevant today. The S&P 500, NASDAQ and Dow have all hit record highs as of the time of writing.
Macron is the next President of France – finally, a win for the establishment. Macron took 66% of the votes over Le Pen’s 33%, but is this a mandate against populism?
With Donald Trump’s victory in the US presidential elections inNovember 2016, the Republican Party succeeded in consolidating control over the White House, the Senate and the House of Representatives.