Will cash returns ever reach zero again? Will cash returns ever reach zero again?

Emerging market (EM) high yield (HY) sovereigns have had a rip-roaring year: in 2024, they outperformed EM investment grade (IG) sovereigns by 12.7%, the most since 2015 (12.5%). What’s more is that this outperformance was founded on significant market-friendly reforms bearing fruit. These included recent moves to end FX distortions[1], tight/er monetary policies, sustained spending consolidation, and, in some cases, the emergence from long-winded debt restructurings[2]. Such reforms, coupled with attractive valuations, created promising opportunities for investors, especially in the distressed space. In addition there…

The base case macroeconomic scenario for 2025 is still in a state of flux given the uncertainties regarding policy, especially in the US. Hopefully, the fog will start dissipating in a few weeks once the new administration takes office, but it is possible that we will still be wondering what happens next for several months.

A few days ago, Bulgaria finally reached an agreement with Austria, removing the last hurdle that blocked its entry to the Schengen area. The EU council is now expected to approve the country joining the passport-free travel area in early December. This clearly represents a milestone in Bulgaria’s integration process into the EU and should help cross-border trade and investment. Meanwhile, a much more impactful achievement for the country’s economy – joining the euro area – remains elusive at the moment. Back in July 2020,…

Fans of the neo-classical Netflix drama ‘Kaos’ will be pleased to know that Eurydice was not alone in returning from the abyss. Followers of European bond yield differentials have witnessed a comeback story of similar scale: Greece can now borrow in world markets at similar rates to Germany’s at the 2-year mark, and below French bond yields across several maturities. Is this a bolt from Olympus, or have the Fates ordained a devious plan? As with all ancient Greek legends, Zeus’ Netflix downfall is announced…

Renewed concerns of European fragmentation: France’s economic and political struggles

The US, and consequently the global bond markets, were rightly focused on the November US election. With the election concluded, it is time to shift our attention from the 50 states to the state of the US economy, particularly the labour market, which is a key economic indicator for policy decisions. Unlike in the past, not all jobs statistics are moving in the same direction and as a result, we are receiving mixed signal from the labour market. Take for example the JOLTS (Job Openings…