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.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
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…Read the article
The world has seen negative interest rates before – Switzerland set interest rates below zero for foreigners in the 1970s in order to slow flows into the Franc. But today’s negative rate environment is far more widespread, with Switzerland, Denmark, Sweden, Japan, and the Eurozone all setting negative policy rates. Lots has been written about the intended transmission mechanisms of negative r…Read the article
A few things that I’ve found interesting over the past week or so:
- I’m just back from a week’s holiday in France, and my news source whilst I was away was the hotel’s International New York Times. Terrible for English Championship football rumours, but lots about US politics and in particular the recent discussion about the Overton Window. Joseph Overton’s theory is that there is a limited ra…