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macro and politics

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The M&G YouGov Inflation Expectations Survey – Q4 2014

Today we launch the next edition of M&G YouGov Inflation Expectations Survey which polled over 8,200 consumers across the UK, Europe and Asia.

The Q4 report reveals that consumers’ short-term inflation expectations continue to moderate across most regions, although they remain well above current inflation levels. Long-term expectations remain resilient despite this year’s low inflation environm…

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Either longer dated index linked gilts are very vulnerable, or the UK economy is

If at the beginning of 2014 you had made a list of what you thought would be the best performing fixed income asset classes globally for the coming year, it’s very unlikely you’d have put UK index-linked gilts at the top. It’s probably even less likely that you’d have put Argentina’s (hard currency) bond market in second place, especially if you had been told that Argentina would default in 201…

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Bretton Woods competition winners: 15 signed copies of Ed Conway’s The Summit go to…

The following 15 people correctly answered that President Richard Nixon effectively ended the Bretton Woods era in 1971 by suspending the convertibility of the US dollar into gold.  Thanks everyone for entering – we will contact the winners by email to arrange delivery of the book.  If you didn’t win, why not try the Bond Vigilantes Christmas Quiz

  1. Frank Markey – Wells Fargo
  2. Doug Brodie – Maste…
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An interview with Ed Conway: The Summit, the story of Bretton Woods. And win a signed copy of the book.

Last week, Sky’s Ed Conway came in to talk about his brilliant book “The Summit”, the story behind the Bretton Woods conference that tried to organise the structure of the global economy in the aftermath of the Second World War, and enshrined the dominance of the US dollar as the world’s currency.

book

The conference took place as the war was still raging, both in Europe in the weeks after D-Day, a…

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Bad loans in banks to be regulated by ECB total €879 billion

Happy Halloween. It’s time for some scary charts.

Halloween is around the corner and that can only mean one thing… scary chart time. Every year around this time, we highlight economic variables and statistics that could give central bankers nightmares. If stuff like non-performing loans, bad forecasts and big numbers scare you then it is probably time to turn off your computer screen and forget you ever saw this blog. The following is not for …

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The lesson the Japanese economy has for the developed world

One of the most commonly reported themes in financial markets today is the fear of disinflation/deflation, and how monetary authorities need to take economic action to avoid becoming the “next Japan”. In February I commented on the fact that the fear of disinflation and deflation is not as logically straight forward as you may think. I think the common assumption that developed economies do not…

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The Signal and the Noise – why local weather forecasters get it wrong, and what it means for those big market calls

I’ve finally got round to reading Nate Silver’s The Signal and the Noise. It’s a brilliant analysis of why forecasts are often so poor, from the man who called every state correctly in the 2012 US presidential election. In short, predictions are often poor because they are too precise (asserting an absolute outcome rather than assigning probabilities to outcomes); there’s often a bias to overwe…

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“Global greying” could mean getting used to ultra-low bond yields

The developed world is going through an unprecedented demographic change – “global greying”. This change is having a massive impact on asset prices and resources as populations around the world get older and live longer. It is also having an impact on the effectiveness of monetary policy. We would typically expect older populations to be less sensitive to interest rate changes as they are large…

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Are wages at the tipping point in the US labour market?

Five years into the US recovery, the labour market is quickly returning to full health. Hiring activity is picking up, employers have added a robust 1.3 million jobs over the past 6 months and the unemployment rate is rapidly approaching a level that could prompt the Fed to start thinking about raising interest rates.  All labour market indicators seem to have improved except for the one that w…

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The Great British Austerity Myth

On the right is UK Chancellor George Osborne, the austerity axeman.  On the left was opposition leader Ed Miliband, the fiscal freedom fighter.  But it now appears that Miliband and co are so alarmed that Cameron and Osborne are better trusted by the electorate to run the now booming UK economy that they are quietly embracing Tory austerity. The Liberal Democrats have accused the Tories of purs…

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