Yield opportunity in the bond market: August 2020

Yield opportunity in the bond market: August 2020
Yield opportunity in the bond market: August 2020
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Two developments stand out on the markets. Firstly, the inflation rate priced into bond yields has not risen lately. The so-called break-even inflation rate for the USA in the 10-year maturity range is just under 1.7%. The development of this indicator gives an indication of the market expectations for the cyclical recovery.

Secondly, the US dollar is once again under pressure (DXY) against a basket of established currencies (EUR, JPY, GBP). A strengthening of the US dollar can be observed against emerging market currencies. With one important exception. The Chinese currency Renminbi was able to further strengthen versus the US dollar. A possible fundamental reason for the weakness of the US dollar is the disagreement between the Republicans and the Democrats about a further economic stimulus package.

Development of bond yields of US- and EUR-Government-Bonds and EUR-Corporate-Bonds Investment-Grade (08/2015-08/2020)

 

Development of bond yields of European High-Yield-Bonds compared with global High-Yield-Bonds and Emerging-Markets-Corporate-Bonds (08/2015-08/2020)

 

Please note:
The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.

Ratio-Overview (more information and all risk notes can be found at www.erste-am.com)

 

Legal note:
Prognoses are no reliable indicator for future performance.

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