Max Severijns

Increasing variations in interest rates on government bonds the Eurozone have reawakened fears of bankruptcy in the periphery of the eurozone. The ECB says it will do everything it can to contain this threat of fragmentation. It remains uncertain though whether financial markets will continue to swallow the ECB’s narrative. These are painful times for bond investors, but there are opportunities.

The ECB has decided to raise interest rates for the first time in eleven years in an attempt to tackle persistent inflation. Asset purchases will also be halted from 1 July. The decision made in Amsterdam on Thursday marks the end of a long-standing period of monetary easing and negative interest rate policy.

With macroeconomic factors and market sentiment dragging down yields, investors are wondering what to do with their real estate investments. For one of the most capital-intensive asset classes, isn’t rising interest generally a bad sign? “Conventional wisdom saying that real estate would always be a good inflation hedge is nonsense.”

The Japanese yen is rapidly losing its value against the dollar, increasing pressure  on the Japanese economy as well as the yen’s status as a safe haven. We investigated the Japanese enigma.

For the first time in twenty years, a dollar is worth 130 yen. Some currency specialists believe that in the short term 135 yen will have to be paid for a dollar. Mazen Issa, currency strategist at TD Securities, even sees an upward trend to 150.

The fact that most active investors do not succeed in beating the market does not mean that the market cannot be beaten. “It is not that complicated at all,” said alpha investor Jens Peers, CEO and CIO at Mirova Asset Management, part of the Natixis group. 

Of all actively managed investment funds, some 85%, after expenses, perform worse than the market. It’s a statistic that fuels the eternal debate between active and passive investors.

Rising interest rates and continuing tension surrounding the Ukraine conflict have brought the issuance of high-yield corporate bonds in Europe to a virtual standstill. “The size and speed of the current interest rate increase is causing companies to stop going public and the market to virtually dry up,” said one specialist.

The yield on US 10-year Treasury bonds topped 2.8 percent on Tuesday, the highest point since 2018. The 10-year yield thus technically breaks the downward trend line that dominated the government bond market for the last four decades. “This is a harbinger of misery.”

Gold gained ground in March. The war in Ukraine has put the precious metal back in the spotlight for investors. But even as the war seems to have been priced in, and interest rate hikes are expected to accelerate, gold remains in demand. What is going on here?

This week’s relative calm in equity and bond markets is in stark contrast with last month’s turbulence. Investors appear to have put concerns over the war in Ukraine on hold for a while. Some market experts warn however that “sentiment may be too positive”. Illiquid corporate bonds are seen as a safe haven.

The economic consequences of Russia’s invasion of Ukraine gave both equities and bonds a volatile first quarter. Nevertheless, most of the losses incurred were quickly recouped.

Sanctions imposed on companies and individuals in Russia and Belarus have triggered concerns that crypto-currencies offer an escape route to circumvent them. Insiders argued that these concerns are unjustified, although crypto sceptics argue that “we should not be naive”.