Equity markets have responded positively to Donald Trump’s election after an initial setback. But Trump’s unpredictability will remain a risk for the full four years of his presidency. It is, however, more important than ever to hold your nerve and dare to be contrarian.
High-yield bond volatility has increased markedly over the past two years, which is partly a reflection of mounting macroeconomic uncertainty. But the unprecedented pace at which money is flowing in and out of the asset class suggests there is something more to it.
Markets have been trading more or less sideways for a while now, but fund managers and fund buyers alike are preparing for the next downturn. And Brexit could be the trigger.
Fund selectors in Finland are adopting the contradictory stance observed quite frequently these days with investors in Europe: they want the Fed to hike rates at the earliest possible occasion, while they would welcome a move by the ECB to extend its quantitative easing programme.
Just like all their European counterparts, apart from the dovish Swedes and Danes, Finland’s fund buyers want to see a US rate hike sooner rather than later. But what does that mean for emerging markets, one of their favourite places to invest at the moment?
