Latest News,
Views & Blog

With the Pacific G10 Macro Rates Team 

Global Macro Overview
Another week passed with more and more parts of the world coming under lockdown. It remains to be seen how much damage is going to be done to the global economy, but we started getting the first evidence of a slowdown from economic data released last week.  

With the Pacific G10 Macro Rates Team

Global Macro Overview
Financial markets experienced another turbulent week, as liquidity continued to be challenging even in the largest markets. Volatility remained elevated with the VIX staying above 70 most of the week, TYVIX (VIX for US Treasuries) at the highest levels since 2008 and various instruments (S&P futures, 30y US Treasury futures, 10y BTP futures) hitting their daily limits up and down on several occasions. While markets were evaluating damage to the economic activity, more and more regions in the developed countries were put under lockdown. 

With the Pacific G10 Macro Rates Team

Global Macro Overview
Last week started with the biggest plunge in oil prices in two decades. That started the chaotic week as markets priced in a price war between Saudi Arabia and Russia, sending oil 30% down on the open. Financial markets had to experience emergency Central Bank actions and exchanges halting trading in interest rate and equity derivatives. As a result, many implied volatility measures spiked to the levels not seen since 2008, while credit spreads widened dramatically.  

With the Pacific G10 Macro Rates Team

Global Macro Overview
Hard to not dwell into sensationalism. Even before this Monday, last week had seen one of the biggest moves across global markets. The volatility came from a gradual realisation that the COVID-19 virus is spreading into developed economies and that policymakers in the US and Europe are not ready to act quickly with a fiscal response. Aggressive actions from Central Banks (50bps cuts from the Fed and BoC, 25bps cut from RBA) failed to stop the markets from pricing in worst-case outcomes. Economic data was mostly ignored, nonetheless it did show that the global economy entered the virus outbreak on a strong footing.  

Conference Call for Clients
With the PAM Investment Management Teams

Last week saw markets fall sharply as investors became unnerved by the marked rise in the number of coronavirus cases outside China.  Because of the increased market volatility, Pacific Asset Management invited clients to listen and take part in the Pacific Weekly Investment Team Meeting. Matthew Lamb (CEO), was joined by Will Bartleet CIO / Portfolio Manager of Pacific’s range of multi-asset solutions and by our Emerging Markets and G10 Macro rates fund teams. 

With the Pacific G10 Macro Rates Team

Global Macro Overview
Last week the main news and market reactions were again dominated by Coronavirus events and news flow. Markets repriced as they continued to absorb the virus related information flow. A picture of lower economic activity has emerged and the markets have priced a higher probability of large-scale lockdowns being implemented in Europe and North America. This realisation was a result of extensive outbreaks over the previous weekend in northern Italy and South Korea, demonstrating that modern countries with well-developed health systems are no less susceptible than any other.  

Latest G10 Macro Rates Blog
With Shayne Dunlap, Co-Portfolio Manager

"Central banks can’t come up with vaccines"
So said regional Federal Reserve Bank president Tom Barkin.

We have experienced two world changing events over the last 12 months, the first was last August with the standoff between the US and China on Trade Agreements and now we are experiencing the spread of CoVid-19. Both are similar in that they are affecting the major G10 economies in the same way and at the same time. The net effect of this is that correlations of markets have increased once again. 

With the Pacific G10 Macro Rates Team

Global Macro Overview
Last week we observed continued divergence between equity and fixed income markets. Whilst Fixed Income markets started to price in a very benign global growth outlook due to concerns about the spread of coronavirus, the S&P reached new highs on Wednesday.  

With the Pacific G10 Macro Rates Team

Global Macro Overview
Interest rate markets were trading with caution over the last week trying to navigate through the coronavirus headlines, politics and macroeconomic data. Yield on the 10-year US Treasuries was stuck in a narrow (less than 10bps) corridor the whole week. At the same time, equities continued grinding higher despite the uncertainty and unquestionably lower (short- to medium-term) global growth prospects that is starting to show in the data. 

With the Pacific G10 Macro Rates Team

Global Macro Overview
Coronavirus related headlines continued to dominate financial markets last week. Once again G10 interest rates paid little attention to strong fundamental data with government bonds selling off in the first half of the week and then rallying back into the weekend.