Investing for the long or the short term? This is the question bond investors ask. In this blog, we will have a look at German government bonds with a remaining time to maturity of two years (2Y; short) and ten years (10Y; long). More specifically, we are interested in the yield differential between the long- and the short-term interest rates. The technical term here is the “slope of the yield curve”.
The rate of inflation has been quite substantial most recently, in comparison with the recent past and surprisingly so for many market participants. The harmonised consumer price index for the Eurozone was 2% higher on a year-on-year basis in February, which was also the highest value since 2013.
USA, the land of unlimited possibilities, the Grand Canyon, and the Big Mac. Here, everything is bigger, better, and higher. But is this also true for interest rates?
Author: Stephanie Clam Martinic
Senior Fund Manager Multi Asset Management
Marine Le Pen has been losing in the polls, a fact probably due to the improved economic environment in France.
Have you ever been to the Monte Carlo F! Grand Prix? If so, you may have witnessed the problem of turning into a curve too late. The race car hits the crasher barrier faster than the driver can react, and a lot of money has to be thrown at the repair job.
“Don’t put all your eggs into one basket” – who has not heard this old stock market adage. With Easter approaching, we are having a closer look at the background of this saying.
Author: Amalia Ripfl
Senior Fund Manager
A “Yes” to Erdogan’s planned constitutional amendment in Turkey would constitute a double-edged sword for investors: the planned presidential system could mean a short-term relief for the markets and for the economy. However, in the long run, this scenario harbours big risks. That being said, a “No” would not help investors either.
The markets were consolidating in March. The global equity index, the spreads for credit risk, and the yields of risk-free government bonds have been going sideways. Before that, the risky asset classes had recorded remarkable price increases, while risk-free bonds had incurred losses. Has the so-called reflation trade, i.e. the positioning towards rising nominal economic growth, come to an end?
Three and a half years after introduction, the Czech National Bank decided today to remove its 27 CZK/EUR currency floor. Many investors were expecting this decision. Indeed, this trade is currently one of the most popular ones among investors. As expected, the Czech koruna appreciated slightly against the Euro. In the short term the currency will remain volatile, as a lot of speculative money is involved. In the long run I expect that the Czech koruna will continue to appreciate given the strong fundamentals of the Czech economy.
Power comes from the socket. Hidden behind it, lies a reality that is a tightrope walk between supply and demand. An imbalance causes blackouts. Energy produced from renewable sources is particularly volatile. A solution for this problem are energy storage devices, especially batteries. The latter offer the advantage of being able to efficiently store power that has been produced locally (e.g. by solar cells). They also make power mobile and can replace petrol and diesel in our cars. In our interview, Dominik Benedikt, Senior ESG-Analyst Erste Asset Management, explains the effects of the rising demand for batteries with regard to environmental, social, and governance aspects.