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government bonds

Argentina’s century bond: much ado about nothing

Argentina’s recently issued century bond deal was unexpected in terms of timing and maturity. Century bonds in Emerging Markets (EM) are rare (we think the table below is pretty exhaustive) and they grab the headlines, especially when issued by a credit that has defaulted many (many) times, like Argentina.

Are century bonds that much risker?

  1. Duration: As we wrote previously, the duration of …

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Czech out: Thoughts on the removal of the currency cap

The Czech National Bank (CNB) has removed its cap against the Euro, which I blogged about earlier this year. Though the signs had been pointing to an early removal (headline inflation had been within the target range since October last year and the CNB had hardened its signalling language), the timing of yesterday’s move at the central bank’s extraordinary meeting did come as a surprise. Curren…

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Eurobonds: one bond to fund them all

The German federal election in September still seems far away. However, for the first time in years, it appears possible that Angela Merkel could actually lose the election. Martin Schulz, Chancellor candidate and chairman of the Social Democratic Party, is having some early signs of success in the polls and is gaining momentum. As a result, investors in European (and UK ) debt might want to re…

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“Venetians, Volcker and Value-at-Risk: 8 centuries of bond market reversals”. Our interview with Bank Underground’s Paul Schmelzing.

It’s rare to find a piece of writing that EVERYONE in bond markets has read and is talking about, but in January, a blog by Paul Schmelzing on the Bank of England’s excellent Bank Underground site did just that.  Paul is a visiting scholar from Harvard University, working at the Bank of England to research foreign exchange policy in the era of Bretton Woods.  In the blog however he took a very …

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A wrap up of 2016 bond and currency market performance

Turning back the clock to the first week of 2016, fears of a Chinese slowdown and the Federal Reserve beginning to normalise rates hit stock markets hard. By Valentine’s Day bond yields had fallen to – what was then – all-time lows.  But we hadn’t seen anything yet. Ongoing ECB QE, Brexit, UK QE, novel Japanese monetary policy, president-elect Trump and ECB tapering. In a year of political and …

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Tantrums and tidbits: Government bond market déjà vu

I have been overwhelmed by a sense of déjà vu of late. Talk of rates not rising again this cycle (US), ever again (Europe), or even being cut even further (UK, Japan) prevails. Quantitative easing continues apace and could be set to broaden further, be that in its duration or via the inclusion of new types of assets. Economic growth appears to be stalling, corporate profitability is showing lat…

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With zero yields, the advantages of bonds over cash are gone

When investors buy or sell financial assets they try to analyse likely outcomes. This basically revolves around three main issues.

  1. What is the capital upside?
  1. What is the capital downside?
  1. What income is earned from the security?

The dramatic fall in bond yields means that this traditional approach to investing will have to be examined.

One way to do this is to model real world outcomes. …

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Why do people buy negative yielding bonds?

Guest contributor – Craig Moran (Fund Manager, M&G Multi-Asset Team)

The following blog was first posted on M&G’s Multi-Asset Team Blog, www.episodeblog.com. M&G’s Equities Team also regularly post their views at www.equitiesforum.com.

These are extraordinary times in financial markets. On a daily basis we are being bombarded with news headlines of political turmoil, market gyrations, forecasts…

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Mike Riddell’s work here is done

Mike Riddell, who worked in and around the bond team here at M&G for the past twelve years, has decided to move on. We can’t say where to yet, but it’s to another big bond fund manager and it’s a good move for him. Normally we’d ask the airbrushing team to have him removed from the official histories, but he did a great job for us and we are all sad to see him go.

Mike did a great job running …

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M&G Panoramic Outlook: The Case for Global Corporate Bond Investing

The euro’s 12-year low against the dollar is a mixed blessing for US companies. On the one hand, the US manufacturing sector is suffering from an uncompetitive currency and lower export revenues. But on the other, rock bottom European interest rates have given US companies an attractive opportunity to issue bonds denominated in euros and lock in cheap financing. For example, in the first quarte…

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