Marcus Ashworth, head of fixed income at Espirito Santo Investment Bank, joined us on Tip TV and began by noting that the mood has changed in the market.
Investors returning to European markets?
Ashworth started by noting that with Greece ‘kind of’ settled, there was some relief in the European market, with Goldman Sachs recommending investors return to European stocks, Blackrock (NYSE:BLK) bullish on Greek bonds and S&P upgrading Greek Government debt ever so slightly. He added that the relief came after a tense period where the Iran and Greek deals and the Chinese meltdown had paniced markets, but now bond markets had taken the edge off. Ashworth continued, highlighting the massive shakedown on German yields, ushering in a negative shift, and which he believes provided some realisation in the bond markets.
What’s next for the bond markets?
Ashworth explains that the FOMC meeting before September remains key for bond markets, as well as the potential September rate hike in the US, where the Fed will likely lead the UK decision making. He elaborated how rate normalization is a must, whilst similarly highlighting the fact that growth isn’t sustaining as expected. August 20th possesses a threat according to Ashworth, with the signing of the memorandum and ECB payment likely to impact Greek bonds heavily.