November 23, 2023
United States:
Fed Pivot Hopes to Turbocharge Southeast Asia’s Curve Flattening
Southeast Asia’s longer-dated bonds have been the winning trade as the region’s yield curve flattened, and there are signs to suggest that the bet will remain profitable.
Hopes of a US policy pivot may provide a tailwind to long-end notes while shorter maturities are buffeted by expectations that regional interest rates will remain high. The gap between Indonesia’s two- and 10-year yields is at a multi-year low while the spreads for Malaysia and Thailand have also narrowed.
Europe:
European Stocks Struggle as PMIs Show Contraction: Markets Wrap
Stocks in Europe struggled for traction on Thursday and bonds fell as activity surveys showed a recession in the euro area is looking increasingly likely.
S&P Global’s purchasing managers’ index was in contraction again in November, hitting 47.1, data showed. While that’s a bigger uptick than anticipated by economists, it marks the sixth consecutive month below the 50 level that indicates expansion.
https://www.bloomberg.com/news/articles/2023-11-22/stock-market-today-dow-s-p-live-updates
Asia:
Chinese Debt Deemed Asia’s Biggest Risk Turns Into a Lucrative Bet
Those who heeded Warren Buffett’s famous investment mantra would have benefited handsomely if they had jumped into Chinese municipal debt, which was identified as the region’s No. 1 financial risk this year in a Bloomberg survey. Instead, short-term bonds issued by China’s local government financing vehicles have rallied through the year.
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