Over the last few weeks we have witnessed a meaningful bounce in inflation breakevens in the UK, Europe and the US. When breakevens are rising, it is a signal that the fixed income market is anticipating higher inflation than has…
Tag Archives: CPI
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Markets start to think about inflation again
- Topics
- Bank of England, inflation
Posted March 19th, 2012
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UK CPI inflation jumped from 4.0% to 4.5%, versus expectations of only a slight increase to 4.1%. Core CPI, which strips out food and energy prices, soared from 3.2% to 3.7% and is now at easily a record high (data…
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The financial crisis is resulting in the authorities, the public, and investment managers seeing things they did not expect to see. Today’s headline RPI level of 5.5% is a record 5% above the Bank of England base rate of 0.5%,…
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This week RPI broke through 5% and CPI broke through 4%. The media are almost universally calling for rate hikes, politicians are starting to voice their opinions loudly, and many investors are worried. If the market reacts to higher inflation…
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Emerging market inflation – a big risk to global growth
- Topics
- inflation, political factors
Posted January 17th, 2011
The reasons behind the ugly scenes in Tunisia are down to a combination of political and economic factors, but at least part of the discontent stems from rising food and energy prices. Public unrest in Tunisia has spread to Jordan,…
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It’s not 1993-1994 in the government bond markets. Unemployment is still way too high to provoke a Fed hike. But the Bank of England might be on the brink of a policy error…
- Topics
- government bond markets, inflation
Posted January 13th, 2011
Government bonds have been selling off over the past month. Since mid October the 10 year gilt yield has risen from 2.85% to 3.63%, the 10 year bund from 2.25% to 3.00%, and the 10 year US Treasury from 2.40% to…
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In the recent emergency UK budget it was announced that public sector indexation would change from RPI to CPI from April 2011. Now, the government is proposing moving private sector schemes and the Pension Protection Fund (PPF) indexation to CPI…
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Mervyn King introduced himself to George Osborne last night by writing him a letter, not to wish him luck in his new and frankly unenviable role, nor to advise him on just how much austerity is needed on 22nd June…
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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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Looking at the broad categories of the UK’s RPI numbers here’s a brief breakdown of where the inflationary – and indeed deflationary – pressures are occuring. The most recent inflation number we have is for November. The headline RPI was…
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