Chris Whittall
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Associate Editor, derivatives and secondary markets, at IFR. Views all mine.
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Articles by Chris Whittall
Derivatives clearing exacerbated the LDI cash crunch
A steep rise in Gilt yields after the UK government’s “mini-budget” on September 23 forced LDI managers to post huge amounts of margin to their swap counterparties as the value of their positions declined. Many LDI funds had to sell Gilts or other assets to meet those demands, contributing to a self-reinforcing doom-loop of bond sales, rising yields and further margin calls.
Structured products back in Korea
IFR Asia 1092 - June 1, 2019 By Chris Whittall This content is only available to IFRAsia.com subscribers This content is available to IFRAsia.com subscribers. Please login if you have a subscription. Alternatively, you can request a trial, or contact your IFRAsia account manager for more information. If you have a subscription to IFRAsia, please enter your login details. If you have forgotten your login, you can request a reminder using the link below.
The Bond That’s Still Paying Interest, 280 Years Later
The French government has owed Marie Verrier’s family money for a long time. Almost 300 years. All Ms. Verrier and her husband, Jean, have to do to claim the world’s oldest government debt is prove they are the descendants of an obscure 18th-century lawyer. The question is whether it’s worth the effort: Three centuries of inflation and shifting...
Investors See Opportunity in Beaten Down Bonds
Large swathes of the corporate bond market are trading at a discount to face value, a dynamic not seen since the depths of the financial crisis 10 years ago. Rather than a sign of impending doom, however, some investors see a unique opportunity to buy bonds with significant headroom for capital appreciation. Rising interest rates and the Federal Reserve’s shrinking balance sheet have sent shudders through the bond market.
Activist Investors Are Spending More and Shifting Their Strategies
Activist investors, spending more cash than ever, are shifting their attention to new targets and honing their strategies. That is the conclusion of a new report from financial consulting firm Deloitte. Activist hedge funds that strong-arm companies into changing their ways currently have invested nearly $300 billion, according to the report. About $74 billion was spent in the year that ended in September, more than double the amount invested in all of 2016.
Global Stocks Tread Water Ahead of G-20
Stocks in Europe and U.S. futures edged lower on the final trading day of the month, as investors awaited further developments on trade negotiations between the U.S. and China. Futures pointed to a small opening loss for the S&P 500 after the benchmark index ended slightly lower on Thursday to snap a three-day winning streak. The S&P 500 and the Dow Jones Industrial Average are both on course to finish slightly higher in November after suffering their worst month in years in October. ...
Banks, Utilities Drag European Stocks Lower
Stocks in Europe opened lowered on Thursday, dragged down by declines in utility and banking stocks, in what is likely to be light trading due to the Thanksgiving holiday in the U.S. The Stoxx Europe 600 slipped 0.5% in early trade after rising over 1% on Wednesday to snap a five-day-losing streak. U.S. futures edged down after the S&P 500 rose 0.3% on Wednesday as markets stabilized following a volatile start to the week.
U.S. Stocks Set for Lower Open
U.S. stocks were poised to open lower Friday amid ongoing volatility in technology stocks and heightened political risks in Europe. Futures pointed to an 0.5% decline for the S&P 500 after the index rose 1.1% Thursday to snap a five-session losing streak because of a rebound in technology shares. A rally in oil prices helped steady markets in Europe and Asia somewhat, even as Brexit loomed in the background. Brent crude prices were up 1.7% at $67.77 a barrel Friday.
Favorite Stock Market Crystal Ball May Have a Crack In it
High-yield bonds, one of the stock market’s best-known bellwethers of doom and gloom, might be missing a beat when it comes to predicting the next meltdown. As the S&P 500 hovers around 8% below its recent peak, investors are looking for clues as to whether the recent selloff is a blip or the start of something more. In selloffs of the past, including the financial crisis of 2007-2008 and the 1998 Russian debt crisis, junk bonds have often been a precursor for stocks to follow.
U.S. Futures Drift Lower Following Sharp Midterm Rally
U.S. futures edged lower Thursday as investors continued to digest the results of the U.S. midterm vote that triggered the largest postelection gain for the S&P 500 since 1982 on Wednesday. Futures pointed to a 0.4% opening decline for the S&P 500 after the index rose 2.2% Wednesday, the third largest percentage gain following an election day on record. The Stoxx Europe 600 trimmed earlier gains to trade up 0.2% recently after rising 1.1% Wednesday.
U.S. Stocks Open Higher After Shaky Start to the Week
Global stocks showed tentative signs of stabilizing Tuesday following another turbulent session on Wall Street triggered by a further slide in technology shares. The S&P 500 rose 0.5% in early trading after shedding 0.7% Monday, teetering on the brink of correction territory, having tumbled 9.9% from its recent peak. The Dow and Nasdaq rose less than 0.5% in the first few minutes of trading in New York. The Stoxx Europe 600 swung between small gains and losses.
Italy’s Debt Predicament, in Seven Charts
Investors are asking whether the recent selloff in Italian debt will force the country’s government to reconsider some of its spending promises. That clash, between the market and the government, promises volatility at a time when Italian government-bond yields have already seen moves reminiscent of the eurozone debt crisis. Rome’s finances are on a surer footing compared with that crisis because successive governments took advantage of historically low interest rates to lock in cheap funding.
Contagion Creeps Back Into Europe’s Bond Markets
Concerns over Italy’s finances are spreading to other European bond markets, in a worrying sign for investors who till recently hoped that market jitters would be contained. Investors dumped the bonds of Italy, Spain, Portugal and Greece on Friday, sending their yields higher for a fourth consecutive day. Italian bond yields have spiked higher since late September when the country’s government set a 2.4% budget deficit target that put it at odds with the European Commission.
Emerging-Markets Selloffs: Why This One Is Different
The deepening selloff in emerging markets this year is one of the biggest of the past decade—and differs in ways that highlight how the developing world has changed. The rout was triggered earlier this year by rising U.S. interest rates and trade tensions, concentrated in a cluster of countries with large dollar-denominated debts, particularly Argentina and Turkey. Other countries have been pressured, but are less vulnerable because they rely less on foreign money.
Last-Minute Trades Accelerate U.S. Share Declines
The selloff in U.S. equities on Wednesday accelerated just before markets closed—an increasingly familiar dynamic that may confirm the growing sway of index-tracking funds. The final minutes of trading before stock markets close has grown in importance in recent years as more money has headed into passive investments such as exchange-traded funds, or ETFs, that look to mimic the holdings of major indexes.
U.S. Stocks, Bond Yields Get a Boost From Revised Nafta Deal
U.S. stocks rose on the first day of the fourth quarter after the U.S. and Canada reached a last-minute deal late Sunday to revise the North American Free Trade Agreement. Investors had been watching trade developments closely for weeks as the U.S. and China ramped up tariffs against each others’ goods and negotiations over Nafta were mired in uncertainty.
Stocks Drop as Hopes for a Trade Truce Fade
Stocks slipped Monday as tensions over tariffs remained front and center for investors after China canceled trade talks with the U.S. The Dow Jones Industrial Average fell 100 points, or 0.4%, to 26642 shortly after the opening bell. The S&P 500 dropped 0.3%. and the Nasdaq Composite lost 0.4%.
Oil Prices Lift Stocks Despite Lingering Trade Concerns
Stocks in Europe and U.S. futures inched higher Wednesday, supported by gains in energy companies following a bump in oil prices. The moves came even as markets in the Asia-Pacific region mostly headed lower on lingering trade worries. The Stoxx Europe 600 was up 0.3% recently, helped by gains in oil-and-gas companies and mining stocks. Futures...
Global Stocks Hover as U.S. Nears Bull-Run Milestone
Stocks in Europe and U.S. futures edged lower on Wednesday after the S&P 500 closed within 10 points of notching a record on Tuesday. The Stoxx Europe 600 fell 0.1% in early trade, dragged lower by declines in mining shares. Futures markets pointed to a 0.2% opening loss for the S&P 500 on a day that would mark the longest-ever bull...
As Lira Rebounds, Investors Find Other Ways to Bet Against Turkey
Turkey’s attempts to stabilize its embattled financial markets have borne some fruit this week, sparking a relief rally in the lira, but investors are still looking for ways to hedge against any new shocks. The lira has gained around 24% against the dollar over the past three days after it hit a record low on Monday.
Turkey Needs Foreign Funds as Short-Term Debt Looms
Turkey’s embattled financial system needs foreign investors. Its plunging currency shows only the bravest are choosing to stick around. Turkey has one of the biggest piles of foreign-denominated debt in the developing world, much of which comes due in the next year, and a currency whose dramatic decline makes it ever more expensive to pay off.
European Shares Extend Recovery as Trade Tensions Linger
Stocks in Europe and U.S. futures showed further signs of stabilizing Thursday, while Asian markets were mixed, as investors continued to gauge the impact of an escalation in trade tensions between the U.S. and China. The Stoxx Europe 600 rose 0.3% in early trade. Futures markets pointed to a 0.2% opening gain for the S&P 500 after the index ended a three-session streak of declines on Wednesday. In...
Markets Take It Easy as ECB Edges Toward Exit
A major global central bank is set to wind up its massive bond-buying program. The last time that happened—the Federal Reserve’s 2013 taper—global markets convulsed for months. This time, in the case of the European Central Bank, markets are digesting the news just fine—for now. But the backdrop implies a tricky road ahead.
Then and Now: The Italian Crisis in Seven Charts
Turmoil in Italian politics has sent shock waves through financial markets in moves reminiscent of the eurozone crisis. Much has changed in Europe over the past six years, with the region’s economy improving and the European Central Bank becoming a prominent buyer of government and corporate debt. But some things remain the same, such as eye-watering levels of public debt in Italy. Bond...
As Mifid Rolls Out, Bond Volumes Fall
Trading in some bonds fell sharply in Europe on Wednesday as banks implemented the massive set of new finance regulations known as Mifid II. The falloff was largely expected, given the volume of trading data that now needs to be recorded makes Mifid II a huge technology challenge for banks. The Markets in Financial Instruments Directive II...
Yield-Starved Investors Giving In to the Demands of Bond Sellers
Hellman & Friedman LLC and other investors sought last month to borrow money in the bond market to finance a takeover. The U.S. private-equity firm offered a yield of about 3%, but few of the protections once considered routine. Rampant demand for leveraged loans is allowing private-equity firms to water down...
Banks to Funds: Have Some Leverage With That Deal
Banks are ramping up a business that was popular before the financial crisis—offering investors ways to lever up sometimes illiquid and complex investments to amplify their returns. Years of ultralow interest rates have pushed down returns across markets, making such strategies increasingly appealing to funds in Europe and the U.S.
Soccer Bonds Are Back, With Inter Milan Aiming to Outscore Past Deals
Italian soccer giant Inter Milan is set to become the latest major sports team to rely on financial engineering—along with its performance on the field—to raise money in debt markets, despite an uneven record for sport-related investments in the past. The current leader of Italy’s Serie A soccer league is looking to sell a five-year €300 million ($354 million) secured bond Thursday at an interest rate of around 5%, according to a deal notice sent to investors. Goldman Sachs Group Inc.
Leveraged Loans on Pace to Top Pre-Financial Crisis Levels
Type and press 'Enter' or click 'Search' Manage Alerts & Newsletter This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. https://www.wsj.com/articles/leveraged-loans-on-pace-to-top-pre-financial-crisis-levels-1512667390 Leveraged Loans on Pace to Top Pre-Financial Crisis Levels Lending to highly indebted companies in the U.S. and Europe is surging Dec.
The Changing Face of the Corporate Bond Market
The European Commission, based in Brussels, Belgium, will consult on how to better the workings of the corporate debt market. The European Commission, based in Brussels, Belgium, will consult on how to better the workings of the corporate debt market. Photo: lecocq/epa-efe/rex/shutterstock/EPA/Shutterstock The European Commission wants answers to an intriguing question: Why is it becoming harder for people to trade corporate bonds, even though companies are issuing more of them?
Nigeria Set for $3 Billion Bond Sale as Pricing Suggests Favorable Demand
Nigeria was set to sell $3 billion in debt on Monday, one of the largest bonds from an African nation and an indication that demand for some riskier investments remains strong. The bond sale attracted orders of around $11 billion and offered a lower income than initial guidance, suggesting good demand, according to an investor in the deal.
Sterling, Bond Yields Tumble on BOE Rate Rise
The British pound slid sharply and bond yield fell after the Bank of England raised interest rates for the first time in over a decade but signaled that further increases aren’t imminent. The BOE’s rate-setting committee voted by a margin of seven votes to two to raise its main policy rate from 0.25% to 0.5%, in a widely expected policy shift.
How the ECB Helped Europe Shore Up Its Shaky Finances
The European Central Bank is likely to scale back its massive bond purchases Thursday. But all of that buying—the ECB has been doing it since March 2015—has already helped reshape eurozone bond markets and given a needed boost to the finances of southern European countries. Thanks to bond buying and record-low interest rates, governments have been able to borrow on exceptionally cheap terms.
Hunt for Yield Fuels Boom in Another Complex, Risky Security
Investors hungry for returns are piling back into securities once tarnished by the financial crisis. Complex structured investments developed a bad reputation during the credit crunch. Ten years later, investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns.
Spanish Markets Sink, but Rest of Europe Still Afloat
Spanish shares and bonds sold off for a third day Wednesday amid concern the political crisis spurred by Catalonia’s independence vote could escalate. Spain’s IBEX 35 slid 2.4%, putting it on course for its largest percentage decline in over a year.
Leveraged Loans Are Back and on Pace to Top Pre-Financial Crisis Records
Lending to the most highly indebted companies in the U.S. and Europe is surging, a development that investors worry could pressure financial markets if the global economic expansion starts to fade. Volume for these leveraged loans is up 53% this year in the U.S., putting it on pace to surpass the 2007 record of $534 billion, according to S&P Global Market Intelligence’s LCD unit. In Europe, recent loans offer fewer investor safeguards than in the past.
In a Blast From a Financial Crisis Past, Synthetic CDOs Are Back
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As Investors Think Taper, ECB Is Set to Buy More Bonds
Just as the European Central Bank gets ready to reduce its bond-buying, this massive player in global markets is set to buy more. The extra buying, as the ECB reinvests the proceeds of maturing debt, creates a new dynamic for investors who have been more focused on when the central bank will begin reducing its €60 billion ($70.9 billion) a...
Euro Jumps to Two-Year High After ECB Meeting
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LONDON—The euro jumped against the dollar to its highest level in nearly two years on Thursday after European Central Bank President Mario Draghi said the ECB will discuss when to trim its massive bond purchases in the fall. But bond markets remained broadly calm, as Mr. Draghi’s tentative language failed to spark the kind of volatility that followed his comments last month in which he hinted at winding down its massive stimulus...
By Christopher Whittall, Geoffrey Fowler Verified, Christopher Mims Verified, Joanna Stern Verified, Chris Whittall Verified
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The Wall Street Journal
Verified
Big U.S. Funds Aren’t Buying the European Recovery Story
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LONDON—How long Europe’s current stock and bond rally lasts may depend on U.S. investors like Eric Stein. International funds, such as Mr. Stein’s Eaton Vance, had withdrawn billions of dollars from the eurozone for large parts of the last decade, amid a sovereign debt crisis and weak growth. But even as the region’s economy and markets...
By Christopher Whittall, Georgi Kantchev Verified, Geoffrey Fowler Verified, Christopher Mims Verified, Chris Whittall Verified
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The Wall Street Journal
Verified
Global Bond Selloff Deepens Amid Hints at End of Stimulus
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Global government bond prices slumped for a third straight day Thursday, while the dollar fell against several developed-market currencies, as investors continued to digest messages from central banks signaling the end of easy-money policies. Investors dumped U.S. Treasurys and European bonds Thursday morning, sending yields on many securities to their highest levels in more than a month. Meanwhile, the euro, British pound and...
By Christopher Whittall, Geoffrey Fowler Verified, Christopher Mims Verified, Joanna Stern Verified, Chris Whittall Verified
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The Wall Street Journal
Verified
Eurozone Bonds Extend Selloff on Hints of ECB Taper
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Investors dumped eurozone government bonds on Wednesday, marking a second day of heavy selling for debt in the region after European Central Bank President Mario Draghihinted at unwinding the bank’s €2.3 trillion ($2.6 trillion) bond-buying program. The euro also continued its ascent against the dollar after notching its largest one-day gain in a year on Tuesday. It was up 0.4% at $1.1387 on Wednesday morning. The yield on...
By Christopher Whittall, Geoffrey Fowler Verified, Christopher Mims Verified, Joanna Stern Verified, Chris Whittall Verified
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The Wall Street Journal
Verified
Brexit’s Impact on Markets: One Year On
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Britain’s surprise vote to leave the European Union on June 23 last year shook financial markets, sending the pound down more than 11% against the dollar in a matter of hours and causing local shares to tumble. Here’s how U.K. markets stand one year later. The pound remains much lower than a year ago... Sterling, the main barometer of investor sentiment toward Brexit, is much weaker than before the vote. Political uncertainty still acts as a drag on the currency, investors say.
By Christopher Whittall, Andrew Barnett, Geoffrey Fowler Verified, Christopher Mims Verified, Chris Whittall Verified
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The Wall Street Journal
Verified
One Year On, the Pound Can’t Shake Brexit Blues
Political anxiety has dragged on the British pound in the year since the Brexit vote. But now a shaken power structure in Westminster and a central bank divided by economic cross currents have investors debating whether the beleaguered currency has further to fall. Last June, the U.K. voted to leave the European Union, and the pound tumbled 11% in a matter of hours.
Fading Populism Boosts European Bonds
Politics are in the driving seat in European bond markets once again. Investors scooped up French and Italian debt on Monday after weekend ballots in those countries showed further signs antiestablishment parties are in retreat. The yield on French 10-year government bonds fell around 0.05 percentage point to 0.598%, according to Tradeweb, its lowest level since November. That came after French President Emmanuel Macron’s La...
When Currencies Fall, Export Growth Is Supposed to Follow-Until Now
For decades, economics textbooks argued that suddenly weaker currencies are a boon to growth, because they make a country’s exports more competitive or profitable on the global stage, which in turn boosts domestic production and employment. What if that theory no longer holds? Economists and government officials are increasingly wondering if that effect is diminishing, especially among advanced Western economies with...
Euro Falls as ECB Lowers Inflation Forecasts
The euro slipped against the U.S. dollar after the European Central Bank lowered its inflation forecasts at its meeting Thursday. The currency’s fall came despite ECB officials dropping a reference to the possibility of lowering interest rates in their regular monetary policy statement. Lower interest rates tend to make euro-area assets less...
In U.K. Election, Many Investors Want the Tax-Raising Socialist
Jeremy Corbyn is a self-described socialist who says he will raise taxes and nationalize industries if his Labour Party wins Thursday’s U.K. election. Some investors hope he does win. The seemingly counterintuitive choice—markets typically welcome Conservative Party victories—says much about how Britain’s vote to leave the European Union has upended the way investors view U.K. politics. Many investors say that Brexit will...
Pound’s Message to Investors: Wake Up and Smell the Election
Investors are scrambling to protect themselves against big moves in the British pound ahead of this week’s election, the outcome of which many had taken for granted. One gauge of how much it costs investors to protect themselves against a slide in sterling hit levels on Monday not seen since the U.K.’s surprise vote to leave the European Union last June. That jump in so-called one-week risk reversals in currency derivatives markets...
It’s Alive! Sterling Bond Market Bounces Back
Investment-grade companies are on track to issue the largest amount of sterling debt since 2012, as the sterling corporate bond market bounces back following years of steady declines. Many investors and bankers have credited the Bank of England’s £10 billion ($12.9 billion) of purchases of high-grade corporate bonds with reinvigorating the market. That buying, which formed part of a larger stimulus package the BOE announced last...
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