FICC Focus Macro Matters: Europe-US Divestment Concerns Look Overstated
Jan 22, 2026
Huw Worthington, Chief European interest rate strategist at Bloomberg Intelligence, shares insights on global rates and divestment fears. He argues that concerns about European investors pulling out of US assets are exaggerated. The discussion touches on Japan's fiscal signals impacting global markets and the potential of European 'anti-coercion' tools. Worthington also analyzes the timing of ECB and BoE easing and the market's response to Fed policy changes. Overall, it's a fascinating look at the interconnectedness of global finance.
AI Snips
Chapters
Transcript
Episode notes
Japan Shock Drove Global Long-End Moves
- A sharp rise in long-term Japanese yields triggered global bear-steepening across G3 rates markets.
- Low liquidity and fears of fiscal giveaways in Japan amplified moves across US and European long ends.
Correlation Spikes Are Often Short-Lived
- High short-term correlations after such events tend to fade quickly when countries face different policy paths.
- Japan is more likely to tighten while the US and Europe are moving toward easing, so contagion is temporary.
Japanese Flows Moved The Market
- Japanese investors' demand shifts are a key flow channel affecting global bond markets.
- Rising JGB yields have pulled Japanese holdings out of Eurozone bonds and Treasuries, reducing prior 'savings glut' flows.