Tag Archives:

fiscal policy

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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Trump’s US tax Christmas present: glittering gifts for Investment Grade telecom companies, but only lumps of coal for High Yield

On 22nd December last year, President Trump enacted probably the most significant achievement to date of his presidency by signing the Tax Cuts & Jobs Act of 2017.  The precise implications of tax law changes can be fiendishly complicated and difficult to assess due to the numbing complexity of the legislation and individual companies’ tax planning arrangements.  However, in broad strokes, I be…

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(Fiscal) rules are there to be broken

A fiscal rule is a permanent constraint on fiscal policy through simple numerical limits on budgetary aggregates. The purpose of fiscal rules is to force governments into responsible fiscal behaviour at a time when it may not be in that government’s short term interests. Both the EU and the UK experimented with fiscal rules until the great financial crisis hit. Then all the rules flew out the w…

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