Spotlight

Brexit Update—The Path(s) Ahead as Deadlines Loom

Mehill Marku, Senior Investment Strategist

Nearly two and a half years after the initial vote, the Brexit process—as well as the country’s deep political divisions—remain as inscrutable and intractable as ever. As the March 29th deadline approaches, the UK’s time for managing the divorce terms and its future relationship with Europe (and the rest of the world for that matter) is quickly running out. This brief note addresses the recent wrinkles in the process, where the situation currently stands, and the hurdles that lie ahead.

Is Your LDI Strategy Recession Ready?

Tom McCartan, FIA, CFA, Vice President, Liability-Driven Strategies

In this paper, we discuss the key risks to a U.S. corporate pension plan's funded status--declining long-term interest rates, tightening long-dated corporate spreads, credit migration, and falling risk assets--and shares practical steps plan sponsors can take now to protect funding levels ahead of the next recession.

Recent Thought Leadership

The Economics of Global Aging: Gray Skies, Rays of Policy Hope?

Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research, and George Jiranek, Analyst, Global Macroeconomic Research

The global economy is in the midst of an accelerating demographic transition, and the implications of this shift for macroeconomic performance and financial markets are sobering. In this paper, we note how aging demographics tend to result in softer real GDP growth, higher public debt levels, and lower inflation. On balance, the implications for asset market performance are skewed toward lower sovereign yields and increased headwinds for risk assets. But such outcomes are not predetermined. The evidence indicates that policymakers have the scope to blunt, if not entirely offset, many of these effects even as government policies in many countries have fallen short of these objectives thus far.

China's Bond Market Opening—Gentle Giant or Behemoth?

Gerwin Bell, PhD. Lead Economist, Asia, Global Macroeconomic Research Team, and Johnny Mak, Portfolio Manager, EMD Team

The opening of China’s onshore bond market marks a historic juncture, however the market has yet to become a focal point for global investors. This paper highlights recent key developments, relevant technical specifics, and the intertwined macroeconomic and regulatory idiosyncrasies that investors need to be cognizant of in order to fully realize the potential of this new investment opportunity.

Weekly View: Strong Move in Spreads

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