ECB's QE: The major question is, will this program work given the European model of debt creation is via the banking system and not the bond markets?
US Treasuries (UST) had a volatile trading month in December and ended the periodwith the 5- and 10-year UST yields 17 basis points (bps) and 0.7bps higher compared to November.
Asia credit recovered strongly in 2014. Long duration bonds gained as the intermediates and long-end US Treasury (UST) yields fell in response to disappointing growth outcomes elsewhere in the world even as the shortend of the curve began adjusting to rate hike expectation in the US.
The overall CNH bond market gained 3.02% in local terms in 2014. Both sovereigns and credits delivered positive returns of 2.6% and 3.14%, respectively.
Through the careful examination of historical data, it is possible to empirically affirm the existence of several anomalies in the stock market, even though there is not always a clear theory or explanation as to why they exist.
As of the end of September 2014, Japanese household financial assets totalled ¥1,654 trillion* (approx. US$15 trillion), representing an on-year increase of ¥44 trillion (approx. US$401 billion), or 2.7%, and surpassing the previous high of ¥1,645 trillion (approx. US$16 trillion**) recorded at the end of June 2014.
US Treasuries (UST) ended the month stronger, trading within a relatively tight range for most of November. At month-end, 10-year UST was yielding at 2.16%, 18 basis points (bps) lower than October.
As we move further away from the turbulent period between 2007 and 2009, interest in credit has increased rapidly as investors globally search for extra return in a low yield environment.
If the RBA does cut interest rates, it is likely that they will make more than one cut, so we could see Australia's official cash rate at 2.00% by the second quarter of 2015.
Growth continues to be a strong theme in Asia making the case for investing in the region a compelling one. The Asia ex-Japan (AxJ) region has more than doubled its share of the global economy since the Asian financial crisis.