Said CEO of Blackrock, world's largest investment fund, in Davos. "The biggest problem now is where to invest money," said Larry Fink. The bad news in bags-with two days last week in which Wall Street lost more than 1,000 points-force to seek new shelters. In just four days, investors have taken out of powerful Fondo SPDR S P 500 The record of 17.4 billion dollars (more than 14 billion euros). And after years of minimal or even negative types, sovereign debt is once again appetizing. The profitability of ten-year US bond has reached 2.84% — its maximum in four years —; and German 0.8% — record in two and a half years.More information
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These tectonic changes in markets respond to a cocktail of motives. "Economic recovery continues strongly and central banks accelerate pace to abandon ir extraordinary measures. But se changes do not justify immense volatility or such abrupt movements, "sums up Jaime Costero, market analyst for BBVA Global Markets Research.
Improvement has aroused fears, especially in United States, that rising rates and ensuing rise in inflation will come sooner and more forcefully. The Bank of England has just warned that, in view of economic strength, tightening of monetary policy will come sooner than anticipated.
"Change is produced by uncertainty about trend of inflation. This is due to a positive factor, such as strong growth, but it generates fear in markets, "adds Diego Mendoza, AFI's consultant. "I see No risk of inflation, but psychosis of inflation," clarifies analyst Juan Ignacio Crespo, who insists that transfer of investments from a variable income in low hours to a fixed income that offers ever higher interests is not automatic. Market volatility has been approaching se days to "lehmanbrorianos levels," adds Crespo.
But higher rates that states will have to pay to finance do not affect everyone equally. While in Germany interests rise, Spanish bond remains at level of se years of open tap of ECB, below 1.5% for titles to 10 years. This allowed still minister of economy, Luis de Guindos, to brag during his presentation as a candidate for Vice-president of ECB of narrowing of risk premium. But this is not due to a fall in Spanish interest, but to an increase in German.Best Spanish Rating
BBVA analyst explains calm in market of peripheral countries bonds for a mixture of motives ranging from improvements in ratings (such as recent Ditch to Spain) to support massive debt purchases by ECB or regulatory changes in bank S
In America, show that stock market experienced was two: quarterly results from corporations and interest rates. When price of money is low, companies have more liquidity and stocks go up. But if that balance wobbles, as it begins to occur, volatility is an act of presence and violent movements such as last week are unleashed.
The interest rate in treasury bills at 2.8% was not seen since beginning of 2014. The year tore it down to 2.5%, after rising from a 1.3% of minimum of July.
This level is one that provoked a week ago first scare. On Monday it came to graze 2.9% in middle of Dow Jones collapse. This correlation is mainly explained by fear of higher-than-anticipated inflation that can lead Fed to withdraw monetary stimulus faster. And to little appetite of investors it adds up to a more expensive budget.
"The party is over," says Boris Schlossberg, manager of BK Asset Management. It sees natural that market rebound but warns that re was a "change of guard" in Federal reserve which will put an end to era of cheap money. This change of strategy to a less lax one explains that bond market is more attractive than stocks.
The fact of employment, and in particular acceleration of wages, was clearest sign that inflationary pressure is real. The most veteran of parquet insist that this is not time to panic, but y do agree that pattern of last few years has been broken, because central banks are not going to be so generous with ir policy.
"We are observing an awakening of inflation after years at very low levels," says Witold Bahrke from Nordea Asset Management. "Labor costs are also rising due to low productivity," he adds. The fear, refore, is real because at same time margins of companies are reduced and Fed has incentives to raise types with more aggressiveness. The bonds, refore, become a safe port when Wall Street suffers.