It’s a powerful vision for the world’s future. The US and China: two growth powerhouses; two major currencies.
With the US dollar poised to rise, there’s never been a better time to reposition into global bonds as your core mandate. But when you do, it’s critical to fully hedge that global portfolio against currency risk. (more…)
Many investors are worried about the future path of the Chinese currency after its sharp depreciation earlier this year. Based on fundamentals and the expectation that China will stick to its foreign-exchange policy, we think the currency has reached a fork in the road and is likely to rally.
The notion that China’s currency, the renminbi (RMB), is on a long-term path of appreciation appears in question after its sharp decline since February. We think that the setback is only temporary—and that the currency will resume its climb in a few months.
Emerging markets have fallen from favor, but does that mean investors should avoid them entirely? We don’t think so.
While this week’s sell-off in Asian currency and bond markets does not, as yet, amount to a crisis in our view, it is obviously cause for concern. At this stage, we think two outcomes are likely: one is that central banks and supranational funding agencies will work together to avert a full-blown crisis; the other is that China will emerge with its power and prestige as a regional financial powerhouse considerably enhanced. (more…)
By Paul DeNoon (pictured) and Kenneth Colangelo
Emerging-market (EM) currencies have long been a popular investment theme. It’s commonly assumed that attractive returns can be earned from the appreciation of EM currencies versus the dollar. The truth is a bit more complicated. (more…)
A US-only bond investor is affected by one business cycle, one yield curve and a single monetary policy. As long as rates were falling, that seemed like a good thing. Not so these days. (more…)
Darren Williams (pictured) and Guy Bruten
As the yen continues to plummet, exporters around the world are growing concerned that Japanese rivals may gain a competitive advantage. But our analysis suggests that the euro-area economy may not be quite as vulnerable as widely perceived. (more…)