Today marks five years on from Mario Draghi’s now famous ‘whatever it takes’ remarks, widely credited with sparking a reversal in the Eurozone’s fortunes.
Below are five charts offering some insights into the European Central Bank’s successes and failures in the ensuing period, as well as some of the challenges that remain.
- Funding costs in the periphery
Five years ago, funding costs for the … Read the article
1. The ECB can act quickly when considering if a bank has reached the point of non-viability (PONV), and enacting a resolution plan. The speed with which regulators acted clearly took the market by surprise. At the same time, how the regulator determines a bank to be non-viable is still a grey area (considering the situation around some of the weaker Italian banks).
2. EU stress tests are not… Read the article
It is hard to remember a time when there was so much disagreement around the outlook for corporate bond markets and risk assets. Some investors remain sceptical about the underlying strength of the rally and are uneasy at the pace at which secular stagnation concerns were washed away by the election of Donald Trump. Other investors, hesitant to hold cash or in negative yielding short-dated gove… Read the article
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… Read the article
Guest contributor – Jean-Paul Jaegers, CFA, CQF (Senior Investment Strategist, Prudential Portfolio Management Group)
Recently Jim Leaviss and I travelled to Tokyo to discuss local economic developments and Bank of Japan (BoJ) policy with economists and analysts based in Tokyo.
There was generally broad agreement that the potential path for Japanese government bond yields (JGBs) is asymmetric. … Read the article
In our latest Panoramic Outlook, Jim Leaviss has a look at the forces that resulted in a tumultuous year for establishment politics, the ECB’s quantitative easing dilemma and the prospects for emerging markets in 2017. For the first time since the financial crisis, it appears that bond yields will come under sustained pressure as central banks gradually remove monetary stimulus. The impacts of … Read the article
It was big news when Postfinance, the first Swiss bank categorised as “too-big-to-fail”, announced the introduction of negative interest rates to customers holding deposits of CHF 1 million and above. Many are now asking how long it will take until banks apply this approach to retail savers. I would argue that it may not be too long given the situation for Swiss banks remains challenging.
Part … Read the article
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… Read the article
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 … Read the article
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…. Read the article