How Will the FOMC Meeting Affect Fixed-Income Markets?
A number of factors, including Fed Chair Ben Bernanke’s comments about a September taper, currency volatility creating turmoil in emerging markets, and conflicting analyses of jobless claims in the United States have placed an unusual emphasis on this week’s meeting of the Federal Open Market Committee (FOMC). The committee’s decisions will have a far-reaching impact on fixed-income markets around the world. Here’s a curated list of articles to help you understand the issues facing those markets, and how they may respond.
Zero Interest Rate Policy, Will the Fed Taper or Won’t It?
- “Fed Taper? Debt Ceiling? No Worries, Says Goldman Sachs” (Wall Street Journal)
- “The Primary Dealers Have Spoken: Taper Begins September With $15 Billion Trim; QE Ends June 2014” (Zero Hedge)
- “Escape from Planet ZIRP” (Barron’s, subscription required)
- “ZIRP, Zombies and the Japanization of the American Economy” (Forbes)
- “BOJ Asset Purchases: Is Japan Sowing Seeds of Next Asset Bubble?” (Enterprising Investor)
Is Emerging Market Opportunity Knocking?
- “Asia 1997 vs. Asia 2013” (Wall Street Journal)
- “The Rupee Is Where? Currency Collapse Confounds India Inc.” (Reuters)
- “Pimco’s El-Erian: Emerging Markets Won’t Collapse” (MoneyNews)
- “Growth, Deficit Problems Not Structural: RBI Chief Raghuram Rajan” (The Economic Times of India)
- “Turmoil in Emerging Markets: Is It 1997 All Over Again?” (Enterprising Investor)
- “Brazil Central Bank Commits $60bn to Prop Up Currency” (BBC)
Rise of the Odd Bonds
- Gigantic issue: “Blockbuster Verizon Bond Sale to Test Debt Appetite” (The Financial Times, subscription required)
- Wipeout issue: “Credit Suisse Sells $2.5bn ‘Wipeout’ Bond” (The Financial Times, subscription required)
- Coco loco: “Danish CoCo Experiment Seen Flopping Before First Bond Sold” (Bloomberg)
- You can’t judge a bond by its cover: “ABS Capital Model May Stem Herding into Covered Bonds” (The Cover, subscription required)
Geopolitics Affects Everything
- “Balance of War Powers: The US President and Congress” (Council on Foreign Relations)
- “In the Picture: Vladimir Putin” (The Financial Times, free but registration required)
- “China’s Ships Near Islands Before Japan Purchase Anniversary” (Bloomberg)
For more discussion of fixed-income markets and their ongoing issues, you can attend the CFA Institute 2013 Fixed Income Management Conference in Boston. Among the many questions to be answered at the event are:
- Are protracted zero interest rate policies laying the groundwork for inflation, new asset bubbles, or something worse?
- Will the United States, Europe, and Japan be able to deleverage while sustaining growth?
- Emerging markets have been hammered. Is it time to double-down?
Helping to answer these questions are your host, PIMCO’s Marc P. Seidner; the always intelligent and funny James Grant; influential debt and bankruptcy expert Edward I. Altman; controversial Japanese economist Richard C. Koo; Blackrock’s Barbara G. Novick; and geopolitical expert, Peter Zeihan. Additionally, CFA Institute’s audience polls give you real-time insight into what fellow investment professionals are thinking about important issues.
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
Photo credit: ©iStockphoto.com/EdStock