Bond markets - Few places to hide
Asia - Panic sellers ignore fundamentals
Russia - Local causes of a vicious correction
Fund managers - Investors turn defensive
Equity market - Earnings might outstrip rate rises
Latin America - A region immune to volatility
Bond markets
Few places to hide
Graham Neilson, ABN Amro's global head of credit strategy, is emphatic. "This isn't 1997 again, and it isn't 2001 again. It is 1993/94, and the comparison is not lost on the market," he says. "The comment then was that rates going up presented an opportunity to buy. That was bollocks the first time around and it will be again."
The upshot of interest rate rises in 1994, as Neilson points out, was one of the biggest bond market unwinds ever. "Bond yields went from 5% to 9% and people were carried out," he says. "It challenged the assumption that you should be a buyer in a dip."
So asset allocators that have learnt their lesson will be allocating less capital to fixed income, and are keen to take profits.
"We've seen profit-taking from Asia, especially the Asian central banks, including in euros," says Dimitri Toseland, principal in the European high-grade fixed-income unit at Banc of America Securities.