Credit ratings are one of the important measures for bond investors since these ratings are assessments of the creditworthiness of a borrower, such as a corporation, government, or a specific financial instrument like a bond. These ratings are assigned by privately owned credit rating agencies such as S&P Global, Moody’s, Fitch Ratings, or Scope. They indicate the likelihood that the issuer will meet its debt obligations (interest and principal payments) in full and on time. As a result, credit ratings help investors evaluate default risk, guide interest rates, and influence borrowing costs for bond issuers. More generally speaking, ratings range

Within the current macroeconomic environment where central banks around globe have started to lower interest rates, bond funds and ETFs have become popular investment choices for all kinds of investors. However, their performance is influenced by a variety of risk and return factors that investors need to understand. The first to mention is obviously the interest rate risk. Every investor should bear in mind that bond prices and interest rates move inversely, meaning rising rates can lead to losses, while falling rates increase bond values. A measure to determine the degree of a bond fund’s sensitivity to interest rate changes

Fathom’s Financial Vulnerability Indicator (FVI) is a tool that measures financial risk in 176 countries; a composite reading, made up of four underlying FVIs, is available on Refinitiv’s Chartbook. The FVI combines more than 40 years’ worth of high and low frequency, macro and financial market data in a rigorous analytical framework to provide an instant, comparable, intuitive measure of financial vulnerability. It also measures country risk to four different types of financial crisis in raw probability terms, own-country normalised terms (i.e. how risky that country is relative to its past, in z-scores) and global normalised terms (i.e. how risky

The Italian equivalent of the English idiom, “to kill two birds with one stone”, involves catching multiple pigeons with one bean, apparently. Whatever the precise translation, Mario Draghi has certainly achieved more than one positive outcome while presiding over the ECB’s QE programme. While the primary rationale for large-scale asset purchases was to return inflation closer to target, the ECB’s QE programme also conveniently compressed sovereign debt spreads between core and periphery states, creating breathing space for countries with excessive debt levels. However, the QE programme is now nearing its conclusion and the end to net purchases will bring upward

China’s ratio of private non-financial debt-to-GDP has now breached 200% – a quarter above what it was in the US ahead of the financial crisis in 2008.  If all off-balance sheet lending were to be included, the total would be substantially higher. Credit continues to flow towards unprofitable projects and unproductive assets that generate little or no return. Fathom estimates China’s non-performing loans problem at close to 30% of GDP, over ten times higher than the official estimate. We struggle to believe that President Xi will be willing to sacrifice lower growth for deleveraging: if and when growth falls below

It is premature to conclude that the Bank of Japan will increase its ten-year government bond yield target in line with rising US Treasury yields. Fiscal dominance, meaning the extent to which fiscal deficits constrain monetary policy, is weighing on the central bank’s independence. With a long road to recovery ahead, even greater collaboration between the government and central bank cannot and should not be ruled out. We look for a widening divergence between Japanese and US government bond yields, all the way down the curve. Refresh the chart in your browser | Edit chart in Datastream Benefiting from global