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During the past 10 months the Emerging Market universe has seen at least three distinct sell-off rounds, revealing different degrees of vulnerability – but who is the most vulnerable?
China pressures risk sentiment today. Raised outlooks for the Netherlands and Belgium. Payrolls confirm: tapering is here to stay. LTRO paybacks on the rise again. Light macro calendar, some auctions on the pipeline.
With ECB rather relaxed about EUR, the US payrolls so-so, the only hope for USD now is if bad news from China escalate...
Today’s stronger-than-expected payrolls data are a very positive sign because the details even suggest that the unusually cold weather was an important drag on February’s jobs growth. As a result, the report supports our view that US economic activity indicators more generally will snap back once the weather normalises.
Today marked the first domestic corporate bond default in China’s history. This default could be a game changer for the entire corporate bond market in China. More corporate defaults can be expected which will help address moral hazard. Risk of spill-over is so far limited because of the small size of the corporate bond market.