Treasuries Rebound From Rout With Global Bonds Still Reeling
The volatility in the bond market is easing as the issuance of investment-grade Bonds in the USA welcomes a 'thawing' phase.
On Tuesday, the high-rated CSI Enterprise bond Index market reopened after a brief lull. This was the first Trade since Trump announced the tariff policy, which led to a surge in credit risk premium and triggered the largest single-day decline since 2022.
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The risk of economic recession is accumulating, and Pimco is Bullish on Global Bonds bringing stable returns.
As the chances of a recession in the USA rise, Pacific Investment Management Company (Pimco) emphasizes the appeal of Global Bonds as a "source of stable returns."
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On Trump's "first day," Emerging Markets faced difficulties, setting several records.
The opening price of the MSCI Emerging Markets Index based on expected PE is 46% lower than the S&P 500 Index, marking the largest gap since Obama's first inauguration in 2009; the average yield of local currency bonds in Emerging Markets is also lower than the yield of USA Treasuries. Analysis indicates that due to USA policy actions, a strong dollar, and high USA interest rates, Emerging Markets stocks are underweighted by investors.
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The dynamics have changed! Under the strong US dollar, emerging markets are at risk.
Analysis suggests that under deglobalization, the growth momentum will shift from emerging markets to the USA, which will be bullish for the US dollar. If the USA further implements even larger tariffs, many currencies in emerging markets pegged to the US dollar will become even more fragile and face the risk of explosive devaluation, especially countries like Argentina, Egypt, and Turkey. The prices of csi commodity equity index will also decline.
Trump's 2.0 policy supports the strength of the dollar, while emerging markets face a double blow in both stocks and currency.
The MSCI emerging markets stocks index fell by 0.8% at one point, marking its fourth consecutive day of decline, setting the longest losing streak in three weeks.
Global money market funds have attracted over $20 billion in inflows for three consecutive weeks, while demand for stock funds has cooled down.
Global currency market funds have attracted inflows for the third consecutive week.