The Euro Summit meeting in Brussels that took place a couple of weeks ago seems to have finally provided some temporary closure to the Greek debt crisis. The dreaded Grexit scenario was avoided (at least for the moment) and the Greek government was able to repay its arrears to the IMF and the ECB using the €7.2 billion bridge loan provided by the European Council. Looking ahead, this short term…Read the article
It has been difficult to filter through the noise of the Greece situation these past few months. But when you stop and have a look at the economic backdrop, things don’t look as bad as some of the alarming headlines might have you believe. Some significant economic headwinds have turned into tailwinds, which will likely drive European growth for the next 18 months.1. The Euro
In April, the Eu…Read the article
Mike Riddell, who worked in and around the bond team here at M&G for the past twelve years, has decided to move on. We can’t say where to yet, but it’s to another big bond fund manager and it’s a good move for him. Normally we’d ask the airbrushing team to have him removed from the official histories, but he did a great job for us and we are all sad to see him go.
Mike did a great job running …Read the article
The euro’s 12-year low against the dollar is a mixed blessing for US companies. On the one hand, the US manufacturing sector is suffering from an uncompetitive currency and lower export revenues. But on the other, rock bottom European interest rates have given US companies an attractive opportunity to issue bonds denominated in euros and lock in cheap financing. For example, in the first quarte…Read the article
US companies issued a record amount of more than €27 billion of euro-denominated bonds (known as ‘reverse Yankees’) in the first quarter of 2015, taking advantage of the relatively low financing costs on offer in Europe compared to their home market. This is just one example of how corporate issuers routinely capitalise on local corporate bond market supply and demand dynamics in search of chea…Read Panoramic Outlook
Deflation. Liquidity. Greece. These are the words of 2015 if you are a bond investor. The year started off with a bang, or rather a break, when the Swiss National Bank (SNB) announced the surprise abandonment of the peg with the euro. This was only a mere week before the European Central Bank (ECB) embarked upon an historic quantitative easing programme. Deflation took hold in Europe, governmen…Read the article
It may only be June as I write this, but it already feels as if we have crammed a whole year’s worth of events into the first six months of 2015.
The year kicked off at a whirlwind pace, with the long-awaited announcement by the European Central Bank (ECB) that it would finally begin its quantitative easing (QE) programme nearly upstaged by the Swiss National Bank’s surprise move shortly befo…Read Panoramic Outlook
I have heard it said, semi-seriously, that the biggest risk for the Eurozone isn’t that Greece leaves the single currency and its economy collapses, but that it leaves and thrives. In this scenario Greece starts again, debt free, able to adapt fiscal easing rather than austerity, and with a devalued “new drachma” encouraging an influx of tourists and a manufacturing and agricultural export boo…Read the article
The graph below shows US unemployment alongside the Fed rate over a period of 45 years. From this you can observe the broad relationship between the two, specifically the time delays between Fed rate hikes and the upturn in employment which has historically followed. This time the Fed have delayed the rate hike for a number of reasons, but if history is anything to go by, we can perhaps use thi…Read the article
A wide range of household decisions – like whether to buy a house, take out a car loan or ask for a pay rise – are affected by expectations about future inflation. Central bankers believe that by closely monitoring inflation expectations they can deepen their understanding about the economic behaviour of consumers. Surveys like the M&G YouGov Inflation Expectations Survey are extremely interest…Read the article