Monthly Archives:

September 2009

The UK Residential Mortgage Backed Security market reopens

It’s been quite some time since we have seen a new public issue in the UK RMBS market. In fact, it’s probably been closed for new deals since the beginning of the crisis. As property prices plummeted, and as everyone fled risk assets for cash and gilts, RMBS bonds saw large price falls. Liquidity in these bonds actually suffered almost as much as subordinated bank bonds, because unlike corporat…

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Does deflation always result in a low and flat yield curve?

We’ve had a huge rally in risky assets since we wrote a comment about Turning Japanese almost a year ago, and while diminished, the risk of a ‘lost decade’ is still very real. I thought it would be worth another look. Now I am not out to compare and contrast the prevailing conditions that led to deflation and QE between Japan and the UK, but what I want to do is ask whether deflation, which led…

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Corporate bond yield levels suggest M&A boom

There has been a lot of talk about M&A activity, fuelled by Kraft’s attempt to buy Cadbury.  Judging by where corporate bond yields are, this talk is entirely justified.  The credit rally we’ve had, coupled with the fact that government bond yields are still very low historically, means that right now non-financial investment grade companies are able to borrow from debt markets at almost the ch…

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When Doves Fly – lunch with David ‘Danny’ Blanchflower

Yesterday the MPC meeting was a non-event since there wasn’t a change in anything.  However a few of us on the team had a bit of a ‘coo’ after we had a much more interesting meeting with David ‘Danny’ Blanchflower, who left the MPC in May of this year with his credibility sufficiently enhanced as one of the very few people who saw chunks of the financial crisis coming.  Having served his three …

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Something to keep everyone happy – Bond markets and equity markets outperforming

The month of August was an investor’s dream, with major asset classes like equities, government bonds, corporate bonds and property producing positive returns over the month. However, like two gunslingers in the American Old West, the equity and government bond markets are now currently staring each other down waiting for the other to flinch.

Taking the UK as an example, 10 year gilt yields an…

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The US banking sector – an analysis of the prospects for smaller banks

Guest contributor – Jeff Spencer (Financial Institutions Credit Analyst, M&G Credit Analysis team)

Investors could be forgiven for thinking that the US banks are well on their way to recovery, with several big banks having redeemed the government preference shares and bought back the government warrants they received under the Capital Purchase Program (CPP) of the Troubled Asset Relief Program …

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Tonight’s TV, get Rosenberg for free, and low default emerging market loans

There are a couple of interesting things on TV this evening, both on More4.  At 10pm it’s True Stories: The Shock Doctrine, a film based on Naomi Klein’s book which looks at the way far right economists have used disasters around the world to impose extreme free market “solutions” (Milton Friedman and the Chicago School of Economics) on society.  After this at 11.45pm it’s Enron: The Smartest G…

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