10 Jun 2013
Flash: A continuation of deleveraging in the markets – JP Morgan
Flash: Research teams at JP Morgan have said that following one of the worst months for fixed income in 20 years, deleveraging continues to sweep through many markets. US equities remained firm but moves in EM fixed income, corporate credit and global FX have been brutal.
They go onto suggest that all of these gyrations are consistent with a sudden rethink of this year’s dominant global macro themes of Abenomics, abundant liquidity and growth gaps. Although there is an element of overreaction in each reassessment, the underlying concerns around policy reversals, market depth and cyclical momentum are still material. Given position concentrations, lack of significant value and risks around Fed policy, deleveraging in some markets can continue.
They go onto suggest that all of these gyrations are consistent with a sudden rethink of this year’s dominant global macro themes of Abenomics, abundant liquidity and growth gaps. Although there is an element of overreaction in each reassessment, the underlying concerns around policy reversals, market depth and cyclical momentum are still material. Given position concentrations, lack of significant value and risks around Fed policy, deleveraging in some markets can continue.