Inflation is set to be a dominant theme in 2007. Will a cooling US economy and global rising rates offset higher energy and raw material increases? We have been scouring around for data and have found the Christmas Price Index….
Yearly Archives: 2006
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Escalating M&A + pension fund crisis = inverted yield curve
- Topics
- BB rated, corporate bonds, pension funds
Posted December 21st, 2006
The impact of pension fund demand on long dated bonds is generally understood, but few realise that rising takeover activity is amplifying this effect. In order to protect people’s pensions, the pension regulator is insisting that the acquiring company fully…
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Richard wrote on December 4th (see here) about a potential gigantic leveraged buyout (LBO) for Home Depot in the US. Since then we have seen the company’s CEO describe the rumours as an ‘unfortunate distraction’ and issue $5bn worth of…
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Which mutual funds are US investors buying?
- Topics
- high yield, mutual funds
Posted December 19th, 2006
The US mutual fund market has much more transparency than here in Europe and AMG Data produce weekly returns of flows into different types of asset classes. So far in 2006, flows into equities have beaten flows into bonds ($60bn…
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Whilst the bull market in credit (especially high yield) has got all the headlines over the past few years, one bond asset class has been an even more spectacular performer – emerging market debt (EMD). In mid 2002 the yield…
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Amongst discussions we had last week, a growing concern over delinquencies within the subprime mortgage market raised its head. The $1.3 trillion subprime mortgage market, which is a bit more than a tenth of the overall US mortgage market, caters…
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Credit Derivatives to Approach $40 Trillion in 2008
- Topics
- CDs, credit risk
Posted December 13th, 2006
Credit default swaps (CDS) , originally conceived by banks over a decade ago to enable the transfer of credit risk are set to approach $40 trillion in size by the end of 2008 according to Deutsche Bank’s credit strategist John…
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Fed on US housing: “gradual” cooling becomes “substantial” cooling
- Topics
- LBO, private equity
Posted December 13th, 2006
The Fed’s FOMC policy statement released last night was notable for a significant downgrading of it’s assessment of the US housing market. In a world where economists look for even the smallest changes of emphasis in the wording of the…
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This morning’s inflation data was higher than expected, with the CPI measure targetted by the Monetary Policy Committee coming in at +2.7% from a year ago against +2.4% the previous month. The headline RPI measure was also very strong at…
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Those who have read Jim’s note of this morning will be aware that he and I spent the latter part of last week in New York. Whilst the US economy dominated many a meeting and conversation another prevalent theme and…
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