This week the 10-year German bund yield hit a new record low of -0.33% in the wake of Draghi’s Sintra speech which had echoes of his 2012 “whatever it takes” declaration. Why so dovish? Manufacturing data from the eurozone has been universally bad lately, and inflation expectations are collapsing. The core inflation rate is now just 0.8% and the ECB’s 2% target looks an impossible goal. The mar…Read the article
The new year has started with a blunt reminder of probably everything that investors wanted to forget over the holiday season: economic data is worsening while the oil price continues to fall, dragging down equities and the most equity-like fixed income asset classes. Traditional safe-havens continue to rally, as they did in 2018.
The year left behind ended far worse than it started: after a st…Read the article
I was in Tokyo last week, seeing a mix of economists, JGB experts and clients. I was also awesome at karaoke, dressed as an astronaut.
The last time I was in Japan, over a year ago, I came away thinking there was a decent chance that the Bank of Japan would abandon its zero interest rate policy (ZIRP) as it was damaging banks’ profits, and sending a negative signal to Japanese households and b…Watch the video
Back in 2017, the economic outlook was increasingly rosy for the Eurozone. After years of ultra-loose monetary policy, a synchronised global recovery was in train. The Eurozone economy expanded apace, regularly surprising to the upside, unemployment continued to fall, the banking system had partially recapitalised and funding costs for corporates and sovereigns alike remained low on any measure…Read the article
Guest contributor – Tristan Hanson (Fund Manager, M&G Multi-Asset Team)
The flattening of the US yield curve has inspired much commentary and hand-wringing in certain quarters lately. The concern is overdone.
Looking back at perio…Read the article
According to recent reports, leading foreign football players in the English Premier League are looking to get paid in euro rather than sterling. Since the UK referendum result in June last year, sterling has fallen by 12% against the euro, so it is unsurprising to see that some players have questioned the denomination of their salaries. It is not the first time that global stars have asked to …Read the article
Guest contributor – Maria Municchi (Fund Manager, M&G Multi-Asset Team)
Despite the partial realignment of European long-dated government bond yields following the Euro crisis in 2012, there has been renewed divergence in yields i…Read the article
The IFS (Institute for Fiscal Studies) Green Budget hit the headlines last week with its forecast that, over the course of this parliament, the UK tax burden is set to rise to its highest level in 30 years. The IFS has calculated that by 2020 the proportion of national income raised through taxes will increase to 37%.
I was at the presentation, and the more concerning issue for me was the rathe…Read the article
Capital markets have experienced a major shift in sentiment over the course of the last couple of months. Fears over secular stagnation and deflation have dissipated, and investors have been willing to embrace risk assets again. Many economists have revised upwards their estimates of global economic growth, starting first with the US where the fiscal reigns are expected to be loosened in order …Read the article
Last weekend we were at the brilliant Kilkenomics festival in Kilkenny, Ireland. Whilst we were there (and it’s a fantastic town) we filmed this short video. In the wake of the Trump election victory there’s a mini-panic going on in Ireland, not least because, in common with Mexico, there are many undocumented Irish in the US whose future has become uncertain. There’s also the huge issue of …Watch the video