Irish rescue plan, although not perfect, but it does for the troubled banking sector, a fast solution. 850 million euro rescue package, the 10 billion euros will be used to replenish the capital adequacy ratio, 25 billion euros will be used for future reserves. While the European Central Bank (ECB) was also positive to maintain low interest rates, continue to implement monetary policy, extending the duration of liquidity support measures from April 2011.

At the same time, Fed Chairman Ben Bernanke also said that Treasury purchases will continue, but did not clear the amount and duration of purchase. It appears that the two big countries in Europe and America heads the wrong decision.

Funds were originally expected to weaken as the risk of a double-dip recession, the U.S. policy of quantitative easing transmission to the stock, which is the time to cash income, and now does not cast a look earlier. As a long-term investors, after two years to share the fruits of liberal policies, should really think about: Germany Can the momentum of recovery in other European countries? Emerging market bonds continued to outperform developed countries, but investors are held as short-term or medium-term objective it?

Cash receipts before Christmas?

Recent statistics show the United States, the U.S. economy continues a moderate recovery. Consumer spending increased more than expected in October, car sales grew by 5%. University of Michigan consumer sentiment index rose, in particular the significant decline in unemployment claims indicated that the labor market is gradually repair process.

Despite undeniable signs of recovery, but the U.S. economic performance is still disappointing. In the previous post-crisis recovery process, the gross domestic product usually takes 5 to the first quarter, after declining more than the previous height, the longest period of seven quarters. Until now, the subprime crisis has been 11 months, GDP is always below the level in 2007. Previous crisis recovery of economic growth to 1 / 3 speed forward, the unemployment rate in the government fiscal policy stimulus is surprisingly high in the second quarter of 2007, total employment is still down 4.6% compared to the end, more than the 1.9% decline in OECD area more serious.

If there is no Bernanke came out from the last month you should “Jiaodimoyou.” Because the “double bottom” of the risk of disappearing in the short term, the Fed decided to continue the quantitative easing monetary policy purposes, these factors have been conducted to the price of financial assets, investors will certainly take profits.

Europe: Only children believe in Santa Claus?

As expected, the three-quarter euro-zone economic growth slows, GDP grew only 0.4%, an increase of 1.9%. These data suggest that Europe is still fragile after the crisis period. In fact, the slow growth in the third quarter, the market was long expected, since the end of June before the economic recovery is not sustainable.

More worried about economic growth within the euro area from the gap. While France and Portugal meet the region’s average growth, high growth in Germany, but there are still economic recession Greece, Spain and the Netherlands were flat, Italy is also facing a recession. Short-term this situation will continue.

Taking into account the European sovereign debt problem, the next quarter’s economic growth is still not very optimistic. Plus 10% of the rate of unemployment, stagnant credit markets are struggling to rebound, make inventory process that is slow but the end is about to close. In short everything indicates that recession is far from over.

Germany could be pulled out unless the plight of Europe, for now, Europe’s largest economy is the only growth engine in Europe. However, it has formed a German exports to stimulate capital investment, increase employment and encourage consumption of a virtuous circle it? Investors can not forget the consumer in recent years in Germany have developed slowly. If you have a climax this year’s Christmas spending, then the increase in signal established.

Emerging market bond yields upward pressure

Long-term interest rates in the rapid increase in more than a week. 10-year Treasury yield rose from 10 in early low of 40 basis points, creating the highest level of 3 months. 5-year yield increase, but only ten Nisshin record high. Mainly due to slow U.S. economic growth is expected to re-aggravate the PIGS countries sovereign debt crisis and avoid the more intense will.

Emerging bond market can not avoid upward pressure on yields. However, the author draws investor attention is: spread remained stable. The same applies to sovereign debt. Compared to developed countries, emerging market fundamentals better make emerging market debt, the economy in the context of this tension is more flexible, which in the past is not always the case.

Also, from a more technical point of view, emerging bond market, some new problems, take some time to digest them. Since the beginning, the amount of new sovereign debt issues more than 720 billion U.S. dollars, the amount of corporate debt issues more than 1,800 billion U.S. dollars, and may first time this year over 200 billion U.S. dollars mark.

In this case, the face of upward pressure on interest rates further, the author suggests should be cautious in the short term. In fact, over the past ten days, the rapid increase in yield long-term bonds when the weaknesses exposed. I continue to firmly recommend the emerging market debt, it can still provide good benefits and an attractive risk-reward ratio.

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Category: Business Management
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