Tag Archives:

Federal reserve

Just like 2008? Oil up, ECB tightening – all we’re missing is a credit accident

As we pass the 10-year anniversary of the Lehman default and we started thinking about what we were doing back in 2008 (desperately moving my savings out of certain banks was high on the list for me, whilst listening to MGMT and Los Campesinos; album of the year? TV On The Radio’s Dear Science), I went back to our blog, to see what the early warning signs were in the summer of that year.

It is …

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Author interview – Adam Tooze: Rewriting the Global Financial Crisis

Ten years after the outbreak of the Global Financial Crisis (GFC) it is time to pause and reflect about an event whose consequences still have a major impact on financial markets and people’s daily lives. In his book “Crashed: How a decade of financial crisis changed the world,” UK economist and Columbia University professor Adam Tooze challenges the way the GFC has been storified, points at so…

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The front-end of the US Treasuries curve: short and sweet?

With the notable exception of the upcoming royal wedding, it would be pretty difficult to find a topic that is currently more over-analysed than the flattening of the US Treasury yield curve. On this blog as well we have pondered potential implications for credit valuations and possible counter-measures the Fed might employ. Still, one aspect that has arguably not received enough attention in t…

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The reversal of Operation Twist and ramifications for the yield curve

The flattening of the yield curve is carefully watched by investors as it is traditionally a good indicator of an economic slowdown. However, we always need to question conventional wisdom, and one thing we can say about the great financial crisis, and the great financial recovery, is that the actions central banks have taken to meet their mandates has been quite different this time.

The Fed ha…

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Can bond markets digest the huge supply of U.S. Treasuries that will be issued this year?

The United States government routinely finances itself through short-term debt, which is normally less expensive than long-term debt, due to the upward sloping nature of the U.S. yield curve. This cost saving does increase the risk of default. Rollover risk arises any time short-term debt is used to finance long-term spending. It is what keeps debt management officials up at night.

The U.S. gov…

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Floating rate versus fixed rate high yield bonds. What are the breakeven scenarios for the next 12 months?

Short term US dollar interest rates continue their march higher. 3-Month USD LIBOR recently hit 1.61%, fuelled by the Fed’s 25 basis point hike on December 13th, a level last seen in late 2008. With further rate hikes on the horizon in the US and a potentially more hawkish European Central Bank, is 2018 the year when floating rate high yield meaningfully outperforms its fixed rate cousin?

The s…

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Beware the death of Libor

Guest contributor – David Covey (Financial Institutions Analyst, M&G Fixed Income Team)

The end is coming for the London interbank offered rate (Libor).  Ten years after suspicions emerged that this key interest rate was being manipulated in the financial crisis, regulators are ramping up their efforts to replace the benchmark rates. The Bank of England (BoE) and US Federal Reserve are leading …

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Mexico: a primer. Elections, inflation, the Bank of Mexico, NAFTA and gasoline

I’m just back from a fascinating research trip to Mexico City, to meet with policymakers, bankers, politicians, analysts, pension funds and regulators.  Like many emerging market economies, the Mexican economy has suffered over the past couple of years due to lower commodity prices and weak global demand for goods.  Of course, Mexico has had its own unique challenge with Donald Trump’s election…

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Financial conditions suggest the case for more hawkish Fed than inflation dynamics would suggest

Guest contributor – Jean-Paul Jaegers, CFA, CQF (Senior Investment Strategist, Prudential Portfolio Management Group)

A lot has been written on the recent softness in US inflation data, as headline inflation pulled back, with a similar trend in core inflation. Admittedly, a number of unusual factors have partly been a driver behind this, although more importantly there is quite some persistence…

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Three of our most popular charts

We often use Twitter to share the charts that we think are interesting, but probably don’t warrant the extra analysis of a blog. With this in mind, I’ve had a look to see which charts were most favourited or retweeted by our followers at @bondvigilantes and provided a little more detail than 140 characters can allow.

  1. Fed Loan Officer Survey show US banks have tightened standards for six consec…

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