Financial markets update

  • Junk-bond funds – those that hold highly risky corporate debt – have experienced significant and sustained outflows for the past month – reaching $6.8 billion in the week to November 15th

  • The S&P 500 downgraded South African local currency bonds to ‘junk’ status, and pushed its dollar debt deeper into non-investment territory. Despite this, Moody’s held off on downgrading, thus preventing South Africa bonds from Being removed from key financial indices

  • The US yield curve, measured by the spread between 2 and 30-year Treasury yields, hits flattest point since November 2007. This is partially due to the Federal Reserve’s raising of short-term interest rates, as investors piling into long-term bonds out of economic uncertainty

  • OPEC talks, set for November 30th, are set to be dominated around how long production cuts should be maintained. Less dependent on high oil prices than their Saudi counterparts, Russian producers are displeased with the current deal. The oil price, which has recently breached $60, will be highly dependent on the outcome of these talks.

  • Despite a raft of economic downgrades in Phillip Hammond’s budget, which entail higher borrowing over the next decade, the 10-year guilt yield remained anchored around 1.25% over the past week