We used to have bear and bull markets, now we have a “chameleon market” to keep us on our toes.
In this week’s edition we will be joined by Richard Woolnough, Fund Manager.
Tune in and listen to our latest thoughts:
- Is the Fed already behind the curve?
- The never ending saga of the Eurozone…
- Special edition: Richard Woolnough’s insight into the credit markets
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1. We are at the point of peak oil pass through: January and February 2016 saw oil prices reach their lows ($34.25 Brent January 20th and $26.21 WTI, February 11th), so this week’s inflation numbers will see some high year-on-year oil price base effects, as will February’s. This is one of the main reasons why we have been seeing significant rises in inflation in recent months.
2. The upward mar… Read the article
For over 3 years, the Czech National Bank (CNB) has maintained the Czech Koruna (CZK) exchange rate close to 27 CZK to the Euro (EUR), essentially using its currency – as opposed to interest rates – as the policy tool to achieve its inflation target. Earlier this month however, the CNB advised that this strategy would be exited “around the middle of 2017”. Though the timing remains ambiguous (t… Read the article
The IFS (Institute for Fiscal Studies) Green Budget hit the headlines last week with its forecast that, over the course of this parliament, the UK tax burden is set to rise to its highest level in 30 years. The IFS has calculated that by 2020 the proportion of national income raised through taxes will increase to 37%.
I was at the presentation, and the more concerning issue for me was the rathe… Read the article
A couple of special guests joined me for this week’s Bond Vigilantes TV. Tune in and listen to our latest thoughts on:
- What’s behind the boom in UK consumer spending?
- How M&A activity might fuel Europe’s high yield bond market this year – with Stefan Isaacs and BAML’s Chris Munro.
- Why US and European banks might have mixed feelings on Dodd Frank.
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It’s rare to find a piece of writing that EVERYONE in bond markets has read and is talking about, but in January, a blog by Paul Schmelzing on the Bank of England’s excellent Bank Underground site did just that. Paul is a visiting scholar from Harvard University, working at the Bank of England to research foreign exchange policy in the era of Bretton Woods. In the blog however he took a very … Read the article
The cost of new mortgage borrowing and payments on outstanding household debt can have a large impact on the rate of growth of an economy. For this reason, central bankers are interested in the transmission mechanism of monetary policy. It has been shown that interest rates can have a stronger influence on an economy where there are a high proportion of variable rather than fixed-rate mortgages… Read the article
Capital markets have experienced a major shift in sentiment over the course of the last couple of months. Fears over secular stagnation and deflation have dissipated, and investors have been willing to embrace risk assets again. Many economists have revised upwards their estimates of global economic growth, starting first with the US where the fiscal reigns are expected to be loosened in order … Read the article
In this week’s edition:
- Bond yields and inflation surprises: waking up to reflation?
- A good start to the year in credit markets
- Record supply in US Investment grade credit
Tune in for the charts and articles that are making headlines in bond markets
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1. On the face of it, long term US Treasury yields are looking fair value, having traded on the dear side since the middle of 2014. Below is a chart you will have seen before on the blog as I’ve been using it for some time. It shows the relationship between the Fed’s long term expectations of short term interest rates (taken, with a pinch of salt, from the FOMC’s dot plots) and the bond marke… Read the article