matt_russell_100

Author profile

Matthew Russell

Years in the bond markets: 12

Specialist subjects: Emerging markets and corporate bonds

Likes: Travelling, gym, reading & pool parties

Heroes: John Nash, John Stuart Mill, Ari Gold

Latest Post

Three reasons we like UK residential mortgage backed securities

The residential mortgage backed securities (RMBS) market has had a good run of late, so is the sector still good value and is there room for it to rally further?

The short answer:  Yes.

The longer answer: There are a number of factors that should prove supportive for RMBS going forward, a few of which are discussed below.

  1. Structure

The Big Short has been available on Netflix for a couple of m…

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What makes a good forecaster? Superforecasting – a book review

I spent a significant chunk of the weekend with my head buried in a great book; Superforecasting: the Art and Science of Prediction. In this book, Philip Tetlock and Dan Gardner tell the story of Tetlock’s experiments in harnessing the wisdom of crowds to predict the direction of geopolitical and economic events. Tetlock, a renowned social scientist, and his global band of volunteer forecasters…

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How severe is the current energy sector default cycle?

To date the defaults we’ve seen in the US high yield market have largely occurred in the energy/commodity sectors. To see whether this trend is likely to persist I spent some time comparing the current default cycle with that of the US telco sector in the early 2000’s (see also James’ recent blog for the parallels between today’s high yield market and that of 2001).

The telco bust occurred slig…

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15.12.18 MR blog

Tough as Granite – an RMBS case study

This weekend the team were doing more than just our Christmas shopping, we were also saying a fond farewell to one of our favourite investments of recent times – our Granite Residential Mortgage Backed Securities (RMBS).

Granite was the name that Northern Rock gave to the vehicle it used to securitise the mortgages that it originated before blowing up in 2007 – when it was no longer able to fun…

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IMF/World Bank Autumn meeting notes

Recently Claudia and I were in Lima for the annual meetings of the IMF and World Bank. Unsurprisingly (given the host nation and history of the meetings) the majority of sessions were on the developing world, in particular Latin America. Claudia will shortly be posting a series of more detailed blogs on the LATAM countries she visited, so I’ll focus more globally.

In aggregate, the IMF is predi…

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BoE September Easing

Contrary to popular opinion, the Bank of England’s next move will be a monetary easing

On the 7th of September £38bn worth of UK gilts (4.75% 2015) will mature. The Bank of England (BoE) own just under half the issue, having purchased the bonds through its £375bn quantitative easing (QE) programme. At this point in time, the BoE have indicated that they are committed to keeping the size of the QE program at £375bn. As a result of the 2015 bonds maturing, the bank will therefore h…

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Demurrage – a tale of gold, cash and mercenaries

Historically I’ve struggled with the concept of gold as an investment. Presumably if you bought gold for this purpose you would want to store it somewhere safe and insure it. However, investors in gold should account for the fact that there is a cost to sleeping well at night. Vaults and insurance don’t come for free, and that cost can be thought of as a negative yield or the demurrage of gold….

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It’s the taking part that counts: why Europe’s labour market might be stronger than we’d thought

We saw further evidence of the strengthening US labour market on Friday. In September, 248,000 new jobs were added and the unemployment rate fell below 6% for the first time in six years. Headline unemployment rates in Europe, by contrast, have been more dismal, with the latest numbers coming in at 11.5% across the Eurozone for August.

Less encouraging for the US was the participation rate fall…

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It’s the regulation, stupid: the ECB’s ABS purchase programme

The ECB is finally joining the Quantitative Easing (QE) party. Un-sterilised asset purchases have been a major policy tool in most of the developed world over the past few years but next month (as the Fed ends theirs, incidentally) the ECB will make its first foray into QE proper by embarking on an asset backed security (ABS) purchase programme.

Through this programme, focused on “simple, trans…

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UKAR – the biggest mortgage lender you’ve never heard of

U.K. Asset Resolution (UKAR) was established in late 2010 as a holding company for Bradford & Bingley (B&B) and the part of Northern Rock that was to remain in public ownership (NRAM).  Unlike other rescued institutions – RBS and Lloyds – whose progress we are kept well abreast of in the media, UKAR has flown under the radar somewhat. To give an idea of scale of the rescue; despite neither enti…

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