Rates going nowhere, issuers going everywhere

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Rates going nowhere, issuers going everywhere

In choosing to leave rates unchanged, the US Federal Reserve on Thursday night opened a window for borrowers to wave through funding. And in its minutes, it suggested that might be a broad window. Good job too.

As the Fed acknowledged in its decisions, "recent global growth and financial developments may restrain economic activity somewhat". Not half, Janet.

Emerging market woes and low oil prices for all rather suggest that there is plenty weighing on the US economy without the need for higher rates. 

Too bad for investors. They will have to make do with low yields for a little while longer. But at least it gives issuers — especially those in the emerging markets — a spell of stability in which to wrap up the year's funding and maybe make a start on 2016's numbers.

There are plenty of disruptive factors to worry about: China's slowing economy and stumbling stock market; Brazil's recession and scandals; and Europe's unresolved sovereign debt problems and refugee crisis (not to mention the upcoming votes in Greece and Catalonia) are all clogging up global growth. 

Even in the SSA dollar market borrowers have to traverse a minefield of super-tight swap spreads and Asian holidays with no central bank buyers to hold their hands.

But what the Fed has gifted primary bond markets is a spell of stability. Inflation, it thinks, will not hit its target soon and if anything those recent global growth and financial developments it speaks of will keep it squashed down for a while yet.

Borrowers would be foolish not to take advantage.

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