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 … Read the article
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… Read the article
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… Read the article
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.
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- Fed Loan Officer Survey show US banks have tightened standards for six consec…
We have written about quantitative easing (QE) many times over the years, yet there remains more to be said: the great QE experiment is not yet over. Given the result of the EU referendum, speculation is rife as to whether the Bank of England will embark on another round of QE to stimulate the UK economy; arguably making this a good time to debate the efficacy of such strategies.
It’s safe to s… Read the article
In the second part of the video from our recent New York research trip, M&G’s Richard Woolnough takes a look at three more topics. Firstly, the U.S. labour market is strong and inflationary pressures are building. The Federal Reserve is currently on hold due to external events, but maybe not for long. Secondly, while the lower oil price by and large is beneficial for Western economies, bond val… Read the article
We are a little bemused following the latest US Employment report. The headline figure of +38,000 jobs for May (expected: +160,000) disappointed the market, with Treasuries rallying and a June/July rate hike off the table in most economists’ views. A decline in the participation rate to 62.6% helped the unemployment rate fall to 4.7%, the lowest level since 2007, while average hourly earnings r… Read the article
2015 saw global inflation risk premia collapse, led by the developed world. US, UK and European annual inflation rates spent most of the year at or around zero with numerous dips into negative territory. Short dated breakevens correspondingly fell to levels that we last saw during the financial crisis (well, to be fair, they went far lower back then, but we are still at crisis levels today), an… Read the article
I keep hearing the argument that the Fed needs to hike, so that if the US economy slows down again it will have room to cut rates once more. In other words it needs to get away from the zero bound so that the traditional monetary policy tool of rate cutting comes back into play in the future. In less cerebral moments I may have made this argument myself, but I’m struggling to remember why it … Read the article
Thirty-five out of forty-one economists surveyed by Bloomberg currently expect the FOMC to hike the Fed Funds rate on September 17, thereby starting a period of policy normalisation. Most have pointed towards the July FOMC statement which noted better data on net in June and suggested some progress toward the conditions for lift-off. Those economists forecasting a rate hike will tell you that t… Read the article