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The ECB may lower rates, but the Swiss shouldn’t follow suit

Expectations are high that European Central Bank (ECB) president Mario Draghi will announce additional easing measures at the next monetary policy meeting on Thursday this week. If the ECB decides to provide further stimulus via extended (or expanded) QE and/or lowers its negative deposit rate further, the Swiss National Bank (SNB) has some thinking to do. I am probably not the only Swiss perso…

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Featured Post

M&G Bond Vigilantes 2016 Macro Outlook by Jim Leaviss

The weather has turned cold, the nights are drawing in and the Christmas lights have been turned on. Not only does the holiday season herald the return of a fat man in a red suit, it is also time for the annual M&G Bond Vigilantes Macro Outlook. Inflation is low, bond yields are negative and global growth is slowing. But things are about to change. The central bank of the world’s largest econom…

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Global bond market outlook 2016

There was, and will be, divergence

It’s not felt like it somehow, but 2015 has been a bear market for US and UK government bonds, with yields up around 20 to 30 basis points (bps) at most maturities. In stark contrast, European bonds have made new record lows this year – initially as the European Central Bank (ECB) announced quantitative easing (QE) and cut interest rates to negative levels, b…

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“Between Debt & The Devil”. An interview with Adair Turner, and a chance to win a copy of his book.

I spoke to Adair Turner last week about his new book, “Between Debt and the Devil”.  You can see my interview with him below.

Early in 2012, as the UK struggled to escape recession, I asked the question “if the government simply cancelled the £300 bn+ of QE gilts held by the BoE, who would be unhappy?”.  Would that have really let an inflation genie out of the bottle?  I argued that even if i…

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Why seasonality in consumer prices matters for bond markets

Guest contributor – Jean-Paul Jaegers CFA (Senior Investment Strategist, Prudential Portfolio Management Group)

One asset class where seasonality matters hugely is inflation linked fixed income. This makes a lot of sense, as inflation is the underlying macro variable, and inflation by its nature is very seasonal. For example, post Halloween sales or Holiday packages tend to happen in regular pe…

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Beware of the pitfalls in US high yield retailers

The fact that commodity-related sectors, like metals & mining and energy, are the highest-yielding and worst performing sub-sectors this year in the broader high yield Index is no surprise. There is a high degree of distressed credits in these sectors suffering on the back of the current low commodity price environment. S&P recently released its summary of sectors with the highest distressed ra…

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Yield without commodity risk – 4 ways you can have your cake and eat it in the US High Yield market

Following another sell off, the US high yield market has once again touched the psychologically important 8% yield level today. This is an important valuation signal that has helped to tempt investors back into the market in recent months. However, the last move up in yields has been driven in part by a renewed downdraft in commodity prices, not least with WTI pricing in the low $40’s. Energy i…

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2015-11 blog AR 1

Is there still slack in the US labour market?

We have often blogged about the current tightness in the US labour market; in particular the initial jobless claims number as a percentage of the working age population being at all-time lows.  The Fed too has recently produced indicators to tell a similar tale; looking at unconventional unemployment proxies – such as the insured unemployment rate in this recent post – suggests that labour mark…

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15.11.04 blog CC1

Colombia: At risk of a rating downgrade to BBB-

Part of the ABC of Latin American debt series (see here for views on Argentina and here for Brazil)

During my recent trip to Latin America it was funny (but not surprising) to hear the locals worrying about Colombia becoming the next Brazil. In turn, Brazilians are worried about becoming Argentina (though I believe the Argentinean problems are much more solvable in the near term than Brazil’s) …

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Chicago research trip video: Tight labour markets and crisis-like corporate bond valuations

It has been a while since we last uploaded a video from one of our U.S. research trips. The question we asked in March as to whether the Fed would hike interest rates this year or not has still not been conclusively answered. Although a 2015 hike is not completely off the table, as we are entering the final two months of the year it seems a lot less likely than it did back then. Nonetheless, fr…

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