With key European elections ahead, post-Brexit relationships remain unclear
The Brexit process started today, when British Prime Minister Theresa May formally notified the European Union (EU) of the UK’s intention to withdraw from the EU under Article 50 of the Lisbon Treaty.
The invocation of Article 50 kicks off a scheduled two years of formal talks with the European Commission, the EU’s executive branch, on the terms of the UK’s exit. Talks will likely lead to a new UK-EU relationship or — in the event of a failure to strike a new deal in time — to the UK “crashing out” of the EU, with the potential for serious economic disruption to trade, investment and general relations.
The nine months since the June 2016 referendum on EU membership has been full of preliminaries, doubts, soul-searching and posturing on both sides of the English Channel. At Invesco Fixed Income, we expect a good deal of posturing to continue as actual negotiations get underway.
Key elections will shape the future of the UK-EU relationshipContinue
Governments could turn to fiscal stimulus rather than relying on central bank monetary policy
When contemplating the investment implications of Brexit, it’s worth considering the probability that it proves to be more significant than just the latest reason to become further concerned about the investment outlook. Clearly, this is the short-term perspective. In the longer term, however, it’s possible that Brexit could be seen as an inflection point in terms of policy strategy to address global economic travails. Specifically, fears of further populist rebellion could potentially lead governments to growth-enhancing fiscal policy instead of leaving the burden to central bank monetary policy, where the risk/reward arithmetic of zero and negative interest rate policies looks increasingly tenuous.
Dangerous political cocktailContinue
Yen rises post-Brexit, while China’s economy takes steps to become consumer-driven
Markets were down in Japan and China in the second quarter. While it appears Japan will continue to show weakness in the short term, there were several bright spots in China that give us cause for optimism.
Yen strengthens post-Brexit
The Invesco International and Global Growth team continues to be strongly underweight Japan. During the quarter, the Nikkei 225 Index was down over 7% when measured by the yen. However, if we consider a US dollar return, the Nikkei was actually up just over 1%.1
So why did the yen strengthen over 8% in the quarter?Continue
We examine the impact Brexit has had on the markets thus far
Prior to the Brexit decision on June 23, global economic, financial and geopolitical conditions were fragile and arguably fraught with no shortage of uncertainty. The outcome of Britain’s referendum vote was therefore anything but welcome, catching many by surprise. Since then:Continue
Following recent market turmoil, we answer investor questions about convertibles
In the market turmoil that followed the UK’s recent vote to exit the European Union (EU), the Invesco Convertible Securities team received a number of investor inquiries regarding the convertible asset class in general and our fund in particular. Investors have been interested to know about exposures to foreign markets and economically sensitive sectors, volatility and liquidity. Below we address the most frequently asked questions we’ve received about convertible securities, or “converts.”