Bonds analysis Emerging Markets has record of good start this year- Emerging markets have had their best start as issuance surged and yield narrowed to their tightest level over us treasurries Riskier assets such as emerging debt were helped by more stability in the European government fixed income market after Greece successfully issued bonds. Bryan Pascoe opined that risk appetite from emerging markets side stronger given the prevailing performance. Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, said: “It is a good time for investors to take some profits and wait for a better time to buy as the market is almost certain to fall in the next few months.” Emerging market sovereign bonds deals have reached a record $127bn so far this year, a 36 per cent increase on last year – the previous record – according to Dealogic. The data provider has been tracking the sector since 1995. Developing world government bond yields for international deals, which are mostly priced in dollars, have been tightening since March last year, when sentiment started to improve on hopes of a global recovery. They have narrowed even more sharply in the past month. Emerging market bond yields narrowed to 254 basis points over US Treasuries on Friday, compared with 350bp only a month ago and a peak of 684bp in March last year, according to JPMorgan indices. Brazil, which has a strong economic story and is one of the more liquid emerging markets, has been one of the best performers. Average Brazilian bond yields in dollars are only 186bp over US Treasuries compared with 442bp this time last year, says JPMorgan. The local currency bond markets have also sharply outperformed developed world debt. For example, Indonesian five-year bonds are trading 596bp over US Treasuries compared with peaks of 1,074bp in March last year

Equity anlysis-
Us stocks sets back in the midst of Global Financial Crisis Us stock pulled back on last Friday and investor worries over Greece's debt Crisis At the close. the S&P 500 was down 0.5 per cent at 1,159.89, but up 0.8 per cent on the week. On Tuesday, it broke through the 1,150 mark, a key technical level. The Nasdaq Composite was 0.7 per cent lower at 2,374.41, but 0.1 per cent higher since the start of the week. The Dow Jones Industrial Average was 0.4 per cent lower at 10,741.98, up 1 per cent on the week. The Dow had risen for eight consecutive sessions before its rally came to an end on Friday. The health insurance sector was in focus ahead of Sunday’s vote on the $960bn reform bill in the House of Representatives. Over the week, Cigna Corp strengthened 7.2 per cent to $37.08, Aetna was 7.6 per cent higher to $34.46 and UnitedHealth Group rose 4.5 per cent to $34.39. Google fell 1.1 per cent to $560 on Friday and 3.4 per cent over the week as speculation mounted that it was set to withdraw from China . Aircraft manufacturer Boeing, reversed mid-session gains to fall 0.2 per cent to $71.72 after saying it would ramp up production for its 777 and 747 airliners to help meet demand. Palm, a maker of smart-phones, on Friday lost 29.2 per cent to $4 after the company warned that it expected revenues in the current quarter to miss analysts’ estimates because of lacklustre demand for its latest products. The stock has fallen 40.9 per cent in the past 12 months. It was downgraded by at least five brokers. Peter Misek, technology analyst at Canaccord Adams, cut his price target from $4 to zero. “We believe Palm’s troubles will only accelerate as carriers and suppliers increasingly question the company’s solvency and withdraw their support,” he wrote in a note. Electronics retailer Best Buy rallied 1.3 per cent to $40.99 on Friday after the stock was upgraded by Goldman Sachs to “buy” from “neutral”, noting that the stock is trading at one of the lowest multiples in the US hardline retail sector, which excludes clothing. Nike rose 5 per cent to $73.52 over the week after the sportswear company reported strong third-quarter earnings that beat average analyst estimates. Net profits more than doubled and North America sales increased for the first time in four quarters. FedEx strengthened 5.1 per cent to $91.05 over the week after the package delivery group reported solid quarterly results. The company also raised its earnings forecasts. Teva Pharmaceuticals rallied 2.8 per cent to $63.03 during the week on news that the Israel-based generic drugs maker had bought Ratiopharm, Germany’s second-largest generic drugmaker, for €3.6bn ($4.9bn). Medical device maker Boston Scientific Corp gained 0.9 per cent to $7.13 on Friday after a regulatory panel backed its implanted cardiac device for use in patients in early stages of heart failure. The device still requires Food and Drug Administration approval. Lions Gate Entertainment increased 1 per cent to $6.03 on Friday as Carl Icahn launched a hostile bid for the film studio group, offering $6 per share. He currently owns about 20 per cent of the company.

Strong dollar could derail markets

The dollar became the funding currency of choice as global asset markets recovered from the lows of March last year.Ulralow interest rates in the US encouraged carry trade investors to sell the dollar to finance the purchase of riskier assets. The Governor of people's Bank of china fears that carry trade might start to unwind pushing the dollar higher and derailing the rally in assets market that has accom- panied global economy's emergence from the financial crisis. Just as the Japanese Yen jumped higher following collapse of Lehman brothers in 2008, dollar is streng- thening. So assets such as commodities,equities and other higher yielding currencies sell off. The dollar has become the funding currency as global assets markets recovered from their post-crisis lows from 2009 March.This was because ultra low rate of interest in the US encouraged carry trade investors to sell the dollar to finance the purchase of riskier, high yielding assets. The result was that the currency fell by 17% on a trade weight basis. Since Dec-2009,the currency has risen more than 8% on a trade weighted basis. Speculative data Analyst say that there is evidence outside short-term speculative data that investors have build significant long positive strides in dollar. Further more they say the dollar is unlikely to lose its status as a funding currency desoite the federal reserve's decision to raise the discount rate. John Normal at Jpmorgan says concerns about soverign risk issues in Europe and surprising actions of other central bank have boosted the dollar over a few weeks before. The Reserve bank of Australia failed to raise interest rate this month while the bank of England announced its willingness to extend quantitative easing. This has contributed to dollar strength. Therefore it could be concluded that a dollar could not be moved to an investment currency from a funding currency follow- ing a global tighening

Emerging markets strikes optimism

The MCSI world index of 23 developed nations added 0.4% in early New York trade,while Emerging Markets gauge advanced 1%.Futures on the standard&poor's500 index swung between gains and losses as Americal International's Group bigger than forecast qua- rterly loss overshadowed an expansion in gross domestic product that beats estimates. Britain emerged from recession at a faster pace than previously estimated in the 4th quarter. The economy expanded 5.9% in the 4th quarter of 2009. 'The emerging markets are a strong story' says Ganske, head of Commerz bank AG in London. The movement is a reaction to the market being depressed over the past couple of days. We are facing a period of higher volatility rather than a long-term, sustained rally". Europe's Dow Jones stock climbed 0.5% as all but 3 out of 19 industry group advanced Saint-gobain Europe's biggest suppliers of building materials surged 7.5%. Rio tinto Group led in mining companies rallying 2.6% in London The MSCI Asia pacific index advanced 0.6% capping its biggest weekly gain in six weeks. Woolworths-Australia's biggest retailer, climbed 5.5% in Sydney as it announced a share buyback. India's sensitive index advanced 2.5% in two months.Emerging Market stock gain were packed by a 0.8% advanced in Turkey's ISE 100 index. Greece's ASE Index rallied 1.9%. The dollar and yen fell against most of their counterparts as signs of global economic recovery and gain in global equities encouraged demand for higher yeilding assets. The dollar declined 0.1% to $1.3560 per Euro early in New York in Feb-26 from Feb-25. It reached $1.3444 on Feb-19, the strongest level since may 18,2009. The yen traded at 120.83 per Euro from 120.69 in Feb.25 when it advanced to 119.66 the strongest since Feb-24,2009. Gold climbs above $1,108 as dollar slips Gold price rose on Feb-26, yesterday, supported a rebound in euro versus the dollar after the previous sessions weakness. spot gold was bid at $1,108 an ounce at 1313GMT against $1,104.7 late in New York on Feb-25. The precious metal has gyrated within a range of around $1,075-1,130 from the last two weeks. Yesterday the euro's rebound from the near nine months low against the dollar in the previous session supported gold,but many expect the currency to stay under pressure. Oil rises towards $79 after US GDP data Following an upward revision in US GDP oil rose to $79 a barrel. The 5.7% growth registered in US maintained a higher level of 5.9% this year start.Rising expect- ations for final demand in the world's top energy consumer. US crude for April delivery rose 74 cents to $78.91 a barrel on Feb-25.Price earlier rose more than $1 to a high of $79.34 a barrel.