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central banks and supranationals

“Unelected Power” by former BoE Deputy Governor Paul Tucker. Our interview, and chance to win his book!

Former Bank of England Deputy Governor Paul Tucker has written a book about accountability and central banking.  Have central banks become “overmighty citizens”, with too much power and insufficient democratic input?  If so, does it matter and what can we do about it?  In an era of QE, and bailouts of commercial banks, wealth inequality has widened in most developed economies.  Did society agr…

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Davos 2018: M&G’s CEO Anne Richards talks to Jim Leaviss. Are markets headed towards another financial crisis?

This year’s Davos World Economic Forum (WEF) comes at a time where equity and credit valuations look high, where we have “obvious” bubbles in cryptocurrencies, and where bond yields – perhaps an anchor for all financial asset valuations – finally seem to be moving higher.  Global borrowing across governments, financial institutions, companies and households is at record levels.  Can the global …

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Floating rate versus fixed rate high yield bonds. What are the breakeven scenarios for the next 12 months?

Short term US dollar interest rates continue their march higher. 3-Month USD LIBOR recently hit 1.61%, fuelled by the Fed’s 25 basis point hike on December 13th, a level last seen in late 2008. With further rate hikes on the horizon in the US and a potentially more hawkish European Central Bank, is 2018 the year when floating rate high yield meaningfully outperforms its fixed rate cousin?

The s…

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Here are some of the scariest charts in finance to celebrate Halloween

Investment markets have been remarkably resilient over the course of 2017. Sure, the geopolitical environment has thrown up a few frightening days which saw markets sell-off but on the whole volatility has been muted and most asset classes have generated solid total returns. That said, any horror movie fan will tell you that the scariest part of a horror film happens when things are relatively …

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European Central Banks: it’s not just the ECB meeting on Thursday

While the market gears up for the much anticipated European Central Bank meeting on Thursday, there are two other European central banks due to meet earlier in the day; Sweden and Norway.

I was in Washington a couple of weeks ago for the World Bank and IMF conferences, which was a great opportunity to hear from policy makers and economists. It served as a timely reminder that the European centr…

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Trump should reappoint Yellen. Also: credit spreads are tight, Tesla, Laffer’s napkin and other stuff.

  1. The Fed Chair choice should be obvious for Trump.  Yellen all the way.  I don’t understand why he would choose Taylor.

President Trump is likely to announce his choice for the next Fed Chair by the end of this month.  Whilst current Chair Janet Yellen is still in the running, she has been slipping down the betting over the past few weeks.  There are three good reasons why (from his perspectiv…

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Mexico: a primer. Elections, inflation, the Bank of Mexico, NAFTA and gasoline

I’m just back from a fascinating research trip to Mexico City, to meet with policymakers, bankers, politicians, analysts, pension funds and regulators.  Like many emerging market economies, the Mexican economy has suffered over the past couple of years due to lower commodity prices and weak global demand for goods.  Of course, Mexico has had its own unique challenge with Donald Trump’s election…

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Three things to watch as the Czech National Bank removes its FX floor later this year

For over 3 years, the Czech National Bank (CNB) has maintained the Czech Koruna (CZK) exchange rate close to 27 CZK to the Euro (EUR), essentially using its currency – as opposed to interest rates – as the policy tool to achieve its inflation target. Earlier this month however, the CNB advised that this strategy would be exited “around the middle of 2017”. Though the timing remains ambiguous (t…

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Poor old ECB. Damned if it does, damned if it doesn’t.

The votes are in and it’s pretty unanimous. Despite Mario Draghi’s best efforts to persuade otherwise, the market is clear that today’s announcements are tantamount to tapering. Frankly anything less than an extension of Euro 80bn per month, irrespective of the duration, was likely to have been taken as such, with scant evidence of the inflation target being achieved during the forecast horizon…

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Unconventional interest rate tightening underway in the US economy

Last week, the Federal Open Market Committee (FOMC) decided that despite low unemployment and a sustained increase in breakeven inflation expectations since September, it was appropriate to maintain the Fed Funds rate between 0.25-0.50%. In trying to understand this action, and why the Fed is happy to wait until December to hike rates, a number of theories have been suggested by the financial c…

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