Lombard Odier Is 'Underweight' Chinese Government Bonds

The video discusses the sensitivity of emerging market currencies to US yield, highlighting opportunities in Latin America and Asia. It explores investment prospects in China, noting challenges in bonds and equities. The Japanese economy's strength and yen trajectory are analyzed, with expectations of BOJ policy changes. The potential for currency volatility and government intervention is also considered.

What makes emerging market currencies sensitive to changes in the US economy?

• Their dependence on US trade policies

• Their sensitivity to US yield movements and the dollar

• Their high correlation with US stock markets

• Their reliance on US technology exports

Why might investors consider high-yielding markets in Latin America and Asia?

• They are unaffected by global economic changes

• They have a stable political environment

• They provide high rates and optionality for medium to long-term investments

• They offer low-risk investment options

What is a current challenge for investing in Chinese equity markets?

• Overvaluation of the Renminbi

• Gradual and piecemeal policy delivery from Beijing

• Low yielding bond markets

• High correlation with global bonds

What is the expected change in Bank of Japan's policy by next year?

• Increase in interest rates

• Removal of yield curve control and exit from negative interest rate policy

• Expansion of quantitative easing measures

• Introduction of new currency controls

What could prompt the Japanese government to intervene in the currency market?

• A significant drop in Japanese stock prices

• The dollar-yen rate crossing 150

• A rise in global oil prices

• An increase in US interest rates