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Brexit

Brexit: The winners and losers in sterling high yield

Much has been written about the impact that the referendum result has had on gilts, the pound and equity markets. In sterling high yield bond markets, we have seen some repricing with the market 2% lower in price terms since the vote. In my opinion, this has been a fairly benign reaction if you consider that the FTSE 250 is around 10% lower over the same time period. One explanation for the mut…

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Didn’t make it to the FT Festival of Finance? We interviewed Pettis, Keen, White and Leaviss for their views.

A few of the M&G bond team recently attended the FT’s Festival of Finance. Known as the Glastonbury of the Financial World, M&G’s Anthony Doyle brought a camera crew along and interviewed a number of speakers on the day, including Michael Pettis (China expert), Steve Keen (of “Debunking Economics” fame), Alex White (political pundit from The Economist) and our own Jim Leaviss. Watch the upcomin…

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Real gilt yields have outperformed

The rise in UK inflation expectations since Brexit

I wrote ahead of the UK referendum that I felt front end index-linked bonds were a good way to play the uncertainty surrounding the result, given the fact that they have crucial non-binary hedge characteristics. Since the result, breakevens (i.e. the market’s expectation of future inflation) have behaved exactly as expected, rallying. The chart below shows how nominal yields have collapsed to r…

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Bond market reaction to UK “Leave” vote

The UK has voted to “Leave” the EU.  We’re seeing some significant moves in fixed income assets first thing this morning as financial markets had very much discounted a “Remain” outcome, in line with the last opinion polls and in particular the betting markets which had heavily backed that outcome.  The biggest market movements though have occurred in the FX markets where the pound fell from ne…

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What I am doing to protect against Brexit… or Bremain.

Over the last few days and weeks, as the odds of a vote to leave in the referendum have moved from a remote possibility to somewhat less so, market participants have spent more and more time wondering about how they are positioned going into the vote, relative to their benchmark, their peer group, or their risk budget. The significant moves that we have seen in recent trading sessions show pret…

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