It's the politics, stupid

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It's the politics, stupid

◆ Trump triumphs, Scholz slumps, rates roil ◆ Credit issuers off to the races ◆ Rates issuers contend with unprecedented Bund-swap inversion

Hamburgs Erster Burgermeister Olaf Scholz (r) begruBt den Prasidenten der Vereinigten Staaten von Amerika (USA), Donald Trump (l), und seine Ehefrau Melania am 06.07.2017 nach ihrer Ankunft in Hamburg zum G20-Gipfel. Der G20-Gipfel der Staats-und Regierun

The underlying movements between benchmark rates and bond yields are rocking the capital markets. Why? Well, this week the blame could be laid squarely at the door of politics.

Donald Trump's resounding victory in the US presidential race means the world's economic currents are about to shift, turbo charging some areas and threatening others. Meanwhile, the collapse of Germany's government helped to push Bund yields above euro swap rates for the first time ever.

Both these things have driven big changes in the value of one asset class in the bond market against another, affecting how much investors want to buy them. We explain the changes underway in SSA, covered, FIG and corporate bonds and what they mean for issuers in the weeks and months ahead.

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