Global Fixed Income Bulletin
Is the Stress Systemic or Idiosyncratic?

Global Fixed Income Bulletin

Is the Stress Systemic or Idiosyncratic?


September 2018

A key issue for investors to address is if the stresses which affected markets in August were predominantly idiosyncratic in nature or if there are more sinister systemic issues at work. If they are mainly idiosyncratic, they are unlikely to derail an otherwise positive global economic environment, supporting risky assets and leading to increased upward pressure on government bond yields. However, if they are indicative of broader underlying tensions in the global economy (excessive leverage, tight financial conditions, deteriorating emerging markets) then the outlook is likely to be a lot more challenging and many “cheap” assets may actually be a “value trap.”


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