Natixis

Since the start of the year, yields for the 10-year TNote and Gilt have been more or less the same. At the same time, the yield spread between Bund and its UK and US counterparts has widened by 100bp, and is now not far off 150bp.

Emerging currencies were under pressure this summer. Save for the Indonesian rupiah, Thai baht, Malaysian ringgit and Chinese yuan, emerging currencies has corrected against the US dollar since 30 June. It is mainly the CEEMEA currencies and, to a lesser extent, Latin American currencies that have underperformed for several reasons...

In accordance with the Right Upon Future Offers or RUFO clause (similar to a conventional clause requiring creditors to be treated pari passu) contained in the 2005 agreement on the restructuring of the debt of the exchange bondholders (preventing Argentina from making more favourable repayments to holdouts unless the conditions are the same as for exchange bondholders), the funds paid by Argentina were not handed over to the creditors.

Mario Draghi’s communication skills have proved exceptionally effective. Since the famous “whatever it takes” in 2012, yields for peripheral sovereign debts have converged sharply towards levels for German debt. Yields for BTPs, Bonos and IGBs sit at record lows.

The strong demand in the primary market confirms what is already well known: whatever the inflation expectations, there is significant structural demand, notably from “buy and hold” investors such as pension funds, for bonds indexed to inflation.