MARKET VIEW: Flexible friends

There are opportunities in US companies' sterling or euro-denominated bonds and UK companies' dollar or euro-denominated bonds. Many parochial local investors shy away from foreign companies they do not know much about, which creates opportunities. In the UK, for example, this month's unexpectedly high inflation numbers did not precipitate the logical sell-off in gilts, with yields barely moving. That suggests most of the market is short - and if no one has bonds to sell, prices are unlikely to fall by much. The world's economies are recovering at different rates around the world. Canada and Australia benefited from going into the crisis with less debt than other major economies and have recovered faster due to demand for their natural resources. Meanwhile, Europe's recovery may be hampered by the weakness of Greece, Spain, Portugal et al.