Monthly Archives:

November 2009

The Movember update

With only four more days of moustache shame left to endure, the M&G team is up to around £6000 raised for The Prostate Cancer Charity.  With some offline donations and a generous contribution from M&G still to be added on, we should be nearing £9000 by Monday when this horror comes to an end.  Thank you very much your kind sponsorship, it’s very much appreciated.

From left to right: Ben Lord, …

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The Bond Vigilantes visit the ECB

A couple of weeks ago I went on an incredibly useful trip to Frankfurt, where I met with some key policy makers from the European Central Bank and the Bundesbank, and discussed a range of issues including the timing of exit strategies and rate hikes, the inflation outlook, and the state of the banking sector. 

This video was recorded in early November, and it’s interesting that many of the thin…

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Greece – the next country getting roughed up by the Bond Vigilantes

The original ‘Bond Vigilantes’ were the bond investors who reacted to authorities’ loose monetary or fiscal policies by forcing sovereign bond yields higher, thus punishing central banks or governments by increasing the cost of issuing further debt.  Right now, the Bond Vigilantes are hunting around the world like a pack of wolves. Japan was the prey a few weeks ago (see recent blog comment her…

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The New Era for Bank Bonds: Send In The Clowns?

The following is a long piece, but we feel it has potentially dramatic implications for the bank bond market.

Last week saw the much anticipated capital raisings from Lloyds-HBOS and RBS. Lloyds has managed to raise £13.5 billion in new shares with HMT’s holdings remaining at 43%, whilst RBS has raised £25.5 billion from the Treasury, and a further £8 billion from the Treasury in the form of co…

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Movember – please help us raise lots of money for the Prostate Cancer Charity

The M&G Bond Vigilantes are growing some very fine moustaches in aid of the Prostate Cancer Charity.  We’re less than two weeks into Movember and already the bond desk looks like the Hulk Hogan Appreciation Society crossed with the Village People.  We’ll post links to our progress as the month progresses (and maybe even photos), and you’ll be able to rate our efforts from the 15th Movember.  If…

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A Shocking result for the "Merchant of Doom"

Whilst scanning the local news website in Sydney for the Melbourne Cup winner (it was Shocking for those antipodeans that are interested), I stumbled across an interesting article that features an ex-colleague of mine. Rory Robertson, an interest rate strategist at Macquarie Group, bet University of Western Sydney associate professor of economics and finance Steven Keen that Australian house pr…

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QE (Quite Enough?) Update & Competition Winner

Earlier today the Bank of England announced that along with keeping the bank rate at 0.5% it is to increase the QE program by a further £25bn over the next 3 months. Whilst an increase was somewhat expected by the market gilts have sold off, the yield on the 3 3/4 2019 rose to 4% earlier as it seems to have expected a larger commitment. Even though we had a GDP print of -0.4% recently it seems …

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QE (Quite Enough?) Update & Competition Winner

Earlier today the Bank of England announced that along with keeping the bank rate at 0.5% it is to increase the QE program by a further £25bn over the next 3 months. Whilst an increase was somewhat expected by the market gilts have sold off, the yield on the 3 3/4 2019 rose to 4% earlier as it seems to have expected a larger commitment. Even though we had a GDP print of -0.4% recently it seems …

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High Yield Déjà Vu? Not Quite Yet

It’s been quite a year to date for leveraged finance. Improving economic data, increased risk appetite and a supply/demand imbalance has driven valuations starkly higher. At the time of writing, the Merrill Lynch European High Yield Index is up a whopping 75%, the average bid for leveraged loans in Europe has risen by around 50% from its lows earlier in the year, and the high yield new issue ma…

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The year is 2020, and the world is about to get hit by the next financial tsunami…(+ **competition time**)

The year is 2020, and at the centre of the financial tsunami is Japan.  Another decade of very low single digit growth has meant that debt to GDP has steadily climbed from 200% in 2010 to 300%, which is considerably higher than any other country.  Another ‘lost decade’ has meant that the Japanese government has been unable to meaningfully cut back on spending or increase taxes, since such behav…

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