The ratings agencies are at it again. Yesterday, S&P (the largest credit ratings agency) announced that it has placed Moody’s (its biggest competitor) on credit watch negative. S&P cited one of the reasons as being the computer bug that is believed to have resulted in Moody’s accidentally giving AAA ratings to some Constant Proportion Debt Obligations (CPDOs), a form of structured credit. Accor…
Read the articleS&P thinking about downgrading Moody’s
Northern Rock’s recovery plan doomed?
A great quote today from Northern Rock’s chairman, as reported on Bloomberg : “If house price were to decline 5, 10 or 15 percent, that would seriously impede fulfilling the plan”
UK Housing Minister Caroline Flint’s Cabinet briefing notes as at 13th May, as shown here : “Given present trends, will clearly show sizeable falls in prices later this year – at best down 5 per ce…
Read the articleJapanese economy booming? Perhaps not, because it’s a leap year
Figures announced on Friday showed that Japan’s economy grew at a headline-grabbing annualised rate of 3.3% in the first quarter of this year, way ahead of expectations of 2.5%. Commentators have focused on strong export growth, although one reason for the surprise may be because the Japanese don’t adjust their growth figures for leap years. The Japanese aren’t the only ones not to adjust for l…
Read the articleSainsbury’s (2%) vs the Office of National Statistics (6.6%) vs the Daily Mail (15.5%). Fight! Fight! Fight!
What is the real level of food price inflation? Are the official numbers released by the Office of National Statistics (ONS) understated? Well the ONS is under attack from both sides. On one front there’s J Sainsbury’s CEO, Justin King, who yesterday claimed that the official food inflation annual number of 6.6% is way too high. Real food inflation, he said, is just 2%. The discrepancy comes be…
Read the articleWhat level of inflation is the UK bond market pricing in?
It was announced yesterday that UK consumer prices climbed 3.0% in April from a year earlier, ahead of expectations of 2.6% and a big jump from 2.5% recorded in March. The Bank of England today said that the inflation rate is likely to breach the 3% maximum limit for “several quarters” and that there could be a “number” of letters to the Chancellor explaining why inflation has breached this 3% … Read the article
Scylla, Charybdis & the Horse Latitudes
Scylla & Charybdis were two sea monsters living on opposite sides of the Strait of Messina posing a very serious threat to passing sailors of the day. Avoiding one typically meant taking great risk passing too closely to the other. The phrase, believed to be the progenitor of the phrase ‘between a rock and a hard place’ is where the European Central Bank finds itself today; presiding over incre…
Read the articleBoris Johnson, and M&G’s fixed income teleconference
Richard is talking through recent goings on in fixed income markets on Monday May 12th at 10am. If you are interested then you can register here.
And for something completely unrelated, this clip reappeared in my inbox recently. If you missed it the first time around, it’s from an England vs Germany legends football match that took place in 2006. Watch the new Mayor of London attempt to disposs…
Read the articleA matter of birth and death
Economic statistics go in and out of fashion like mullets and hoola-hoops. When I started in bond markets the obsession was with the monthly government borrowing number, the PSBR. This was at the time that the Conservative government was borrowing heavily in the middle of the last UK recession – the current numbers are just as high, but now the market doesn’t bat an eyelid. When Richard Woolnou…
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