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Japan: weakening growth and inflation, and an unpopular government

I was in Tokyo last week, seeing a mix of economists, JGB experts and clients.  I was also awesome at karaoke, dressed as an astronaut.

The last time I was in Japan, over a year ago, I came away thinking there was a decent chance that the Bank of Japan would abandon its zero interest rate policy (ZIRP) as it was damaging banks’ profits, and sending a negative signal to Japanese households and b…

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BVTV: did ‘super week’ justify its billing?

The combination of the US-North Korea summit, crucial Brexit negotiations in the UK, mounting trade tensions, and a raft of central bank activity led some commentators to forecast that this would be the biggest week of the year. In fact, the beginning of the week was rather underwhelming, and it took a dovish ECB to really move markets. See how it all unfolded on today’s episode of Bond Vigilan…

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BVTV: Carry, valuations and fundamentals – the pillars of currency investing

Emerging market currencies have been back in the spotlight in recent weeks after significant repricing – so it seems like a good time to lift the lid on how we think about currency trading. While there are many different aspects to take into consideration, there are three key factors – carry, valuations and fundamentals – that we keep front of mind.

With lower returns from bonds in recent years…

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A life less easy for the ECB

Back in 2017, the economic outlook was increasingly rosy for the Eurozone. After years of ultra-loose monetary policy, a synchronised global recovery was in train. The Eurozone economy expanded apace, regularly surprising to the upside, unemployment continued to fall, the banking system had partially recapitalised and funding costs for corporates and sovereigns alike remained low on any measure…

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“The Great Economists” by Linda Yueh. Our interview, and chance to win her book!

We interview the academic and TV presenter about her choices of history’s most important economists, and ask what we can learn from them in solving our current problems. Also, win a copy of Linda’s book in our competition.

From Adam Smith, to Robert Solow, Linda Yueh’s latest book examines twelve important economists and suggests how we might use their thinking as we tackle modern society’s ec…

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Never a dull moment – trying to make sense of last week

Political turmoil in Italy and Spain, escalating trade tensions and, for good measure, unexpectedly strong US employment data – to say that markets had a turbulent few days would be an understatement. Taking a step back, here are three lessons I took away from last week.

(1) Market sentiment shifts can be brutal

Political risks in the European periphery are real – a statement that might sound t…

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BVTV: High drama for Italian high yield?

While political instability is nothing new for Italy, last week’s developments have triggered major market moves. The 10-year Italian government spread to Bunds jumped to as high as 288bps last week, which is an impressive move if you consider that investors were only asking for a risk premium of 122bps at the beginning of the month. Despite a rebound in markets towards the end of the week, the…

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“Unelected Power” by former BoE Deputy Governor Paul Tucker. Our interview, and chance to win his book!

Former Bank of England Deputy Governor Paul Tucker has written a book about accountability and central banking.  Have central banks become “overmighty citizens”, with too much power and insufficient democratic input?  If so, does it matter and what can we do about it?  In an era of QE, and bailouts of commercial banks, wealth inequality has widened in most developed economies.  Did society agr…

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BVTV: Time to add Argentina?

After a significant policy error at the end of last year, Argentina has once again found itself in trouble – and back in the headlines –  in recent months, suffering from dented credibility and a fast depreciating peso. This morning on BVTV, I look at whether current levels now offer a buying opportunity.

Also this morning: what’s behind EM FX market weakness, and is it actually a US dollar sto…

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The front-end of the US Treasuries curve: short and sweet?

With the notable exception of the upcoming royal wedding, it would be pretty difficult to find a topic that is currently more over-analysed than the flattening of the US Treasury yield curve. On this blog as well we have pondered potential implications for credit valuations and possible counter-measures the Fed might employ. Still, one aspect that has arguably not received enough attention in t…

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