Global market worries
26 November 2015 12:04 pm
The global markets are going haywire and it’s terrifying
For a start commodity prices have nosedived, hovering at 13 year lows.
The US dollar is powering higher and it still has a way to run according to a senior portfolio manager at bond group Pimco.
All this is happening at a time when the yield curve is flattening and is now sitting a dozen basis points shy of the tightest spread since the height of the financial crisis in early 2008.
In the US, energy companies are going out of business, European bonds are trading below zero, in Japan which is in recession, the banks are printing money and the Federal Reserve is being dragged kicking and screaming to raise interest rates by a paltry 25 basis points after keeping them near zero for seven years.
The slowdown in global trade raised worries recently as the Organization for Economic Cooperation and Development reported that international commerce has slowed to levels “consistent with global recession.”
With corporate debt now higher than it was on the eve of the financial crisis, it tells us there are worrying times ahead.