Monthly Archives:

June 2009

UK housing : firm foundations, or a rally built on sand?

Recent data releases in the UK have been interpreted as suggesting that the housing market may be showing signs of some form of recovery. Our interpretation, though, would be that the releases suggest merely that the pace of decline is slowing. On top of this important difference in interpretation, we would like to highlight the risk of a potential further turn down in housing market data.

In t…

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How about a savings account with an interest rate of minus 4%?

Some interesting ideas about how Japan (and by extension the rest of us) can get out of the deflation trap in today’s Times.  The article, "To fight deflation, abolish cash", proposes that getting rid of physical money will allow policy makers to do something not possible in a world where the population can hoard bundles of bank notes in sock drawers – namely to set an effective negative nomina…

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Government indebtedness – we ain’t seen nothing yet

Longevity risk and pension fund deficits aren’t exactly new topics – one of the first ever comments on this blog was on precisely this subject (see here).  But it’s going to become a bigger and bigger issue over the coming years, and this has huge implications for both bond investors and for the global economy as a whole.  Last week the IMF made an important contribution to the debate with this…

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BoE: we can "rule out the hypothesis that most households expect inflation to return to target in the year ahead".

Today we saw the release of May’s inflation data, which came in a little higher than the market expected.  CPI is running at 2.2% on an annual basis, and RPI remains in deflation, at -1.1%.  Food and energy prices continue to be disinflationary factors, whilst the prices of DVDs, TVs, clothing and footwear rose.  There was a rise in average mortgage payments too, which impacted the RPI number, …

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