Fitch ratings agency, whose note on Iceland last year originally kicked off the Icelandic banking crisis, yesterday downgraded Iceland’s government bonds from AA- to A+. The Icelandic krona fell 1% against the sterling on the news. Fitch said that "the…
Recent posts from Richard Woolnough
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Not since I began working in the City in the mid 1980s can I remember seeing an economic data release come out so many billions higher than market expectations. Yesterday morning, it was announced that so-called M4 lending, which is…
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Does the recent drop in UK mortgage approvals signal rate hikes are taking hold?
- Topics
- News
Posted February 1st, 2007
My favourite chart over the past few years has been mortgage approvals plotted against house prices, with a seven month lag. The number of mortgage approvals are a fantastic indicator of what’s going to happen to house prices half a…
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Financial and media commentators spent much of the second half of 2006 predicting a US housing market crash and an economic slump. True, the housing market did weaken last year, but US GDP figures out yesterday paint a completely different…
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The US housing market is getting worse and worse, and the UK looks set to follow it. Yesterday saw the monthly update on the disaster that is the US housing market. Figures showed that the downturn is accelerating – the…
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The Bank of England has to continue driving rates higher
- Topics
- Bank of England, interest rates
Posted January 15th, 2007
In an article that appeared in the Daily Telegraph on January 13th (view article here), I argue that the Bank of England has to drive interest rates higher. Structural changes in the UK mortgage market mean that the transmission mechanism…
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I thought it would be useful to explain the key positions in the new M&G Optimal Income Fund and how I am making use of the “wider powers”, so that readers can get a better understanding of my strategy for…
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Pension fund black hole much bigger than previously thought
- Topics
- gilts, pension funds
Posted January 2nd, 2007
A recent report from the Pensions Regulator states that the UK’s pension fund liabilities exceed pension fund assets by £440bn. The calculation is now a little out of date as it was made on March 2006, so given that bond…
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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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US investors are taking note of the weakening dollar (see Top Dollar no more? for more info on the dollar weakness). Data released by Merrill Lynch shows that so far in 2006, Americans have been net sellers of US mutual…
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