United States

Geopolitical tensions, particularly the increasingly hostile relationship between the US and China, have driven some equity investors to take a risk averse position in preparation for a choppy autumn.

India’s Bombay Stock Exchange has launched trading in interest rate options linked to the country’s government bonds.

In this round-up, the tit-for-tat trade tariff situation between the US and China escalated over the weekend, and the People’s Bank of China (PBoC) issued detailed rules for benchmarking mortgage borrowers to the recently unveiled loan benchmark rates.

In this round-up, the US gave Huawei another three months to buy supplies from US companies, the Chinese government revealed plans to turn Shenzhen into ‘a demonstration area of socialism with Chinese characteristics’ and Japan replaced China as the largest holder of US treasuries

JP Morgan announced the terms of a massive tender offer this week, as supply slowed to a trickle in the US dollar market.

The return of heightened market volatility this summer has cast a shadow over final few months of 2019 for equity capital markets. Investors are weighing up whether to buy new deals in at a time of heightened geopolitical risk and deteriorating macroeconomic conditions.

Proofpoint, the California-based cyber security company, became the latest issuer this week to take advantage of the booming market for US technology sector convertible bonds, raising $800m to finance its growth.

The return of heightened market volatility this summer is leading to investors looking at defensive assets as fund managers consider how to ride out a possible turn in the economic cycle.

PG&E’s high yield bonds are trading above par, even as Chapter 11 bankruptcy proceedings advance at the Californian gas and power company. According to one credit research company, bad news may even be good news for the bondholders.

With slowing growth in the global economy, and heightened trade tensions between the US and China, the bear case for equities remains very strong as 2019 enters its final stretch. However, there is still a strong bid for convertible bonds, especially deals from the technology sector, according to equity-linked investors.

LiquidityEdge, which operates an electronic marketplace for US Treasuries, could now look at offering a similar service in the European government bond market after its purchase by MarketAxess. The latter’s president, Chris Concannon, sees the pressure European banks face to cut costs as a boon for trading automation in the region.

The US corporate bond market continued to crank out investment grade deals despite fears of a global recession battering risk assets this week.