Today the Reserve Bank of Australia (RBA) surprised markets by cutting official interest rates by 0.5% to 3.75%. Weaker inflation data out last week and a deluge of soft economic data has got the RBA rattled. We’ve discussed bubbles down…
Tag Archives: interest rates
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RBA slashes interest rates – the lucky country is getting nailed
- Topics
- government bonds, interest rates
Posted May 1st, 2012
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Central banks’ poor forecasting records and why the Fed may hike rates before late 2014
- Topics
- interest rates, US
Posted March 23rd, 2012
Central banking has evolved substantially in recent decades. Part of this evolution has involved a move towards greater transparency around a central bank’s forecasts and operations. The reason for this shift is because it is believed by many economists that…
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Markets start to think about inflation again
- Topics
- Bank of England, inflation
Posted March 19th, 2012
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…
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1993 was a golden year for US Treasury investors, with 10 year yields falling from 6.7% at the start of the year to 5.3% by its end. It felt like nothing could go wrong – and inflation had even fallen…
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The Bank of England should cut rates rather than make state run Halifax hike mortgage rates
- Topics
- Bank of England, mortgages
Posted March 6th, 2012
I had lunch last week with a Bank of England MPC member, and I asked him why the Bank didn’t cut rates below 0.5% in order to help the banking sector improve its Net Interest Margins (NIMs) and thus its…
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The ECB’s mandate says raise rates, but is the ECB’s mandate correct?
- Topics
- ECB
Posted March 8th, 2011
The European Central Bank firmly laid its cards on the table at last Thursday’s press conference. Trichet et al are in no mood to risk potential second-round effects of rising wages. According to JP Morgan the phrase ‘strong vigilance,’ uttered…
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Traditionally the main concern for a bond investor is inflation. It reduces the real returns of a bond, hence prompting higher long term interest rates, and causes the authorities to increase short term interest rates as a policy response. The…
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We first started writing about the credit crunch 3 years ago (see August 2007). Since then, short-term interest rates in the USA, Europe and the UK have collapsed to near zero. Ten year government bond yields across the respective economies…
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If it's Wednesday, it must be…Spain. Tail wags dog.
- Topics
- credit rating, government bonds
Posted April 29th, 2010
Following the downgrades of Greece (to junk) and Portugal (to A-) on Tuesday, S&P looked upon the carnage in sovereign bond markets that ensued and decided that on Wednesday it would be Spain’s turn. Spain’s sovereign credit rating was cut…
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According to many market commentators, the UK debt market is looking sick and is at a critical juncture. It is amongst the most unloved government markets in the developed world, which is understandable given the British inability to save in…
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