(FS.5.01) Bond Market Your browser does not support the audio element. [New] Stabilization of bond yields will help to counter risks and a 7-year yield of 6.5% is still hard to ignore for investors searching for higher yield. [New] The tight labour market could see US inflation pick up by more than expected, leading the Federal Reserve to raise its policy rate sooner than is currently projected, which could increase bond yields and financial market volatility more generally. [New] The projected annual percent increases for 2019's worldwide corporate bond offerings are 3.2% for IG and 5.1% for high yield. [New] The projected annual changes for 2018's worldwide corporate bond offerings are -4% for IG and -29% for high yield. [New] The worldwide corporate bond offerings of 2018 are expected to show annual increases of 2.5% for IG and 8.0% for high yield. [New] Five to 10 more nations will jump on the green bond bandwagon later this year, further contributing to the growth of the market: China will lead the way in issuance next year. [New] Trump's policies are bond unfriendly and the 10-year T-note yield could climb to 3% next year from around 2.50% today. The green bond market has taken off in the past five years, with 2019 issuances expected to reach USD 190 billion. In the Chinese bond market, which Bloomberg pegs to be valued at around $11 trillion, major firms routinely leverage their Tencent QQ and WeChat instant message accounts to research opportunities, take orders, and everything in between. If confidence in the capital markets returns and sustains, PE sponsors should expect to be able to tap the bond market to finance their deals in 2019. Given the evidence from the bond market that the economy is likely to become more sluggish, there is little prospect that the Fed will raise rates in 2020. For the sustainable bond market - green bonds, social bonds and sustainability bonds - will be somewhere between $360 and $400 billion by the end of this year, a 30-40% increase in volumes. A green sovereign bond could be a means of communicating Sweden's target to reduce emissions of greenhouse gases by 85% by 2045. Late last year, the bond yield curve became inverted: Some longer-term bonds began paying less than shorter-term bonds, suggesting widening market fears that a U.S. recession could loom sometime in the next two years. SEB, a leading Nordic bank and green bond specialist, has predicted that the global green bond market should grow from around $180bn to $210 in 2019. Observing that the main source of inflows in 2018 remains sovereign bond issuance, as the GCC countries raised $30.5bn in Eurobonds in the first half of the year; it said moving forward, the overall sovereign bond issuance is expected to decrease due to lower financing needs. The fledgling green bond market will build on the progress China has already made with bonds aligned with climate change goals. In the Chinese bond market, major firms routinely leverage their Tencent QQ and WeChat instant message accounts to research opportunities. Buy-side firms managing trillions in assets are the ones with the capital and will need to start behaving like non-bank liquidity providers. The US Treasury could increase Treasury bill issuance by at least $200bn per annum without the market's ability to absorb that extra supply being compromised. There is no doubt that 2016 will not only be the Year of the Monkey-it will be the year of the green bond market as well. The global bond market will grow to USD149trn by 2024, at which time the EM fixed income universe should have grown to USD39trn, or 26% of the global bond market. See full forecast Last updated: 27 May 2020 Hi, Would you like a quick online demo of our service from an experienced member of our team? Yes No
