Paul McNamara, investment director responsible for GAM's emerging market strategies, looks ahead to 2017 and reflects that the likely drivers of EM local currency bond markets are the same ones that led to overall outperformance last year.

We believe now is a good time to ready bond portfolios for reflation: improving growth, wage gains and higher inflation. We see global reflation running further in 2017 and spurring a modest rise in global bond yields.

Equities continued to make new highs as we moved into 2017, but we are mindful that the outlook is littered with macro-economic and political risks – not least the forthcoming elections in France, Holland and Germany, Article 50, and President Donald Trump.

T-note yields have had a somewhat volatile week. The yield on 10y notes traded as low as 2.30% before closing last week at 2.40%. Short positioning in US bonds has normalized thanks in part to successful auctions.

S&P 500 Buyback Index, which has hit the highest in late 2014/early 2015, had retreated outperformance during most of 2016. With Donald Trump's victory in November, however, buyback indices and buyback related ETFs again hit the market higher....