Steepening yield curve points to further pain

While rate cuts are good news for short-dated bonds, spreads on long-dated bonds will continue to widen, says Amstad at Aberdeen Asset Management.

Donald Amstad, head of fixed-income at Aberdeen Asset Management, expects Asian currencies, equities and credits to ourperform their US and European peers in 2008.

The company is broadly overweight on most Asian currencies and remains optimistic on the long-term prospects of Asian equities. However, Amstad expects further short-term rate cuts in view of worsening economic conditions, which in turn will lead to yet more increases in the cost of long-term borrowing rates.

├┤The reasons for a relatively rapid deterioration in...

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