Monthly Archives:

November 2020

Africa’s sovereign debt: an interview with Gregory Smith

In this 15-minute interview I ask M&G’s Greg Smith, an emerging market debt strategist with a speciality in Africa and formerly a World Bank economist in Zambia, how the continent is coping with the Covid-19 pandemic.  We also discuss how worried we should be about the negative headlines coming out of the region over Zambia’s recent default on its international bonds.  Is this the start of a w…

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RPI reform: result as expected – market reaction not

The background to Wednesday’s announcement

In line with market consensus, on Wednesday the government announced that RPI would be made into CPIH, a lower number. This is not being done for political reasons by the Chancellor, but for statistical ones.

As I have written about previously the national statistician has made clear for years that it does not like RPI, and that it has been frus…

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“High” Yield yields hit a low

The dramatic rally in US high yield bonds since the end of September saw yields reach lows of 4.6% earlier this month, the US high yield index’s lowest level since 2000.  Yields have risen modestly since then but remain very tight: 4.9% at the time of this writing.  The US high yield bond spread over risk-free government bonds has narrowed close to its pre-Covid level (see chart below), a tren…

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This recession, banks are the good guys

The Covid-19 crisis has been a very different recession in a number of ways. One that I think is particularly interesting is the role of banks. While it is a vast oversimplification, ask ten people what caused the great financial crisis, and nine will answer “the banks!”.

This time round, it has been the commercial banks that have helped many economies to remain functioning. Nowhere is that…

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