Category Archives:

macro and politics

Angela Merkel’s Pyrrhic victory

And they say German elections are boring… As the preliminary results are in, here are our three key takeaways.

(1) Merkel goes fourth

First things first, as expected Angela Merkel has won the election. Her CDU, in combination with its Bavarian sister party CSU, is going to remain the largest faction in parliament (33.0% of votes combined). All roads lead to a fourth term for her as chancellor. …

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A dozen things I’m finding interesting in bond markets. Includes weasels.

1. On the face of it, long term US Treasury yields are looking fair value, having traded on the dear side since the middle of 2014.  Below is a chart you will have seen before on the blog as I’ve been using it for some time.  It shows the relationship between the Fed’s long term expectations of short term interest rates (taken, with a pinch of salt, from the FOMC’s dot plots) and the bond marke…

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Research trip: Mexico & Trump – a key call in emerging markets

President Trump’s anti-Mexico rhetoric has made Mexican assets one of the key calls in emerging market debt. I have just returned from a research trip to Mexico where I met with local economists, analysts, and corporate bond issuers. Below are a number of observations from my time there.

Donald Trump won the election on a fairly protectionist rhetoric – with a special focus on Mexico – and the …

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President Trump will be good for the transmission mechanism of animal spirits

The world will soon turn to the inauguration of Donald Trump. For at least the next four years, global investment markets will be focusing on his Presidency. This is always the case when a new President takes over the reins of the most economically powerful country in the world, but why does it feel more important this time?

Firstly, political deadlock has been broken. For the first time since …

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10 years of the M&G Bond Vigilantes blog. A new book and fundraising for Cancer Research UK.

Today is the 10th anniversary of the Bond Vigilantes blog.  Here’s a look back at the incredible changes to bond markets and monetary policy that we’ve been through over that decade.  Also today we are launching our new book (the difficult second album) in support of Cancer Research UK.  There’s a link to our Just Giving page at the bottom if you like what we do and can spare a few quid.

My fi…

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How will bond and currency markets react to the US election result?

We are now less than a week away from the US presidential election, with the latest polls suggesting the race to become the 45th President of the United States is neck and neck. Bond and currency managers around the world are currently trying to assess how a win for either candidate might affect their portfolios. Here is my best estimate as to what might happen.

A Clinton win

A Clinton victory …

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IMF and World Bank meetings 2016: China, Japan, UK and Europe

Last year we blogged with our key takeaways from the IMF and World Bank meetings and this year is no different. Claudia Calich and I tag-teamed between the Washington based events, participating in the many wide ranging discussions that took place, so we’re doing the same here. Claudia will be providing the emerging market coverage, while I share some insights from developed markets, alongside …

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Armageddon fatigue: reasons to be optimistic in the longer term

Watching the news flow on the global economy is dispiriting. Ask an economist what springs to mind when they hear the word “Europe”. They will probably reply with thoughts about negative interest rates, deflation and debt concerns. It isn’t much better when you bring up the economic outlook for the US (“the upcoming election is a concern”), Japan (“the BoJ is at the limits of monetary policy”),…

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The book taking France by storm. Économie du Bien Commun – a review.

During my free time in August I read the book that has taken the French political and economic landscape by storm (no, it’s not  “Capital” by Thomas Piketty). Nobel Prize winning economist, Jean Tirole, has written a book entitled “Économie du Bien Commun” (or “economy for the common good”). The book is written in plain language and attempts to reach a large audience, including readers with ve…

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Either the demographic bond models are broken, or yields are headed to 10%.

For fixed income fund managers it was once the case that if you understood the evolution of the relative sizes of the various cohorts of the young, the working, and the retired in a population, you could predict bond returns.  Lots of workers relative to the “unproductive” young or elderly meant low wage pressures, lots of demand for savings assets such as bonds, and lower government borrowing….

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