Tag Archives:

QE

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…

Watch the video

Time to sell Bunds?

German government bonds have gone from strength to strength in recent times; much like the German team at the World Cup – I wish! But is the latest Bund rally sustainable? I think not.

Let’s start with the bull case. In a recent blog, I described how Bunds had provided an efficient hedge against surging political uncertainty in Italy, due to the negative correlation between yields on German and…

Read the article

In a QE adjusted world, bond indices look very different

Investing in public securities, whether equity or debt, is driven by two primary desires; firstly a need to save for the future, and secondly the requirement to see these savings grow. This results in a need for investors to pursue low risk and high growth investments.  In order to understand these risks, assets get categorised based on their potential and historic risk characteristics. Broadly…

Read the article

Which corporate bonds will the ECB buy?

Bond markets have reacted strongly to the 10th March announcement by the European Central Bank (ECB) of its new corporate sector purchase programme (CSPP). Credit spreads of euro-denominated investment grade (IG) corporate bonds have tightened by around 20 bps on average. Still, a lot of the CSPP’s particulars are anybody’s guess at this point. The publication of the account of the last monetar…

Read the article
Inflation expectations

Has the ECB reached the limits of monetary policy?

The simple answer is a no. Eric Lonergan in a guest blog has already (see here) debunked the idea that central banks are at the zero bound. And since then the market has become increasingly confident that the ECB will cut its deposit rate further into negative territory at tomorrow’s meeting. And it has reason to do so. Inflation and growth will be lower than the Bank had forecast a mere three …

Read the article

“Between Debt & The Devil”. An interview with Adair Turner, and a chance to win a copy of his book.

I spoke to Adair Turner last week about his new book, “Between Debt and the Devil”.  You can see my interview with him below.

 

Early in 2012, as the UK struggled to escape recession, I asked the question “if the government simply cancelled the £300 bn+ of QE gilts held by the BoE, who would be unhappy?”.  Would that have really let an inflation genie out of the bottle?  I argued that even if …

Read the article

As economists predict a Fed rate hike, can we learn anything from the 2013 “Fed Fake”?

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

Inflation Surprises – what’s driving the current increases in market- and survey-based indicators of inflation expectations?

(blog originally posted on www.bruegel.org)

Euro area consumer price inflation, as measured by the HICP, continues to undershoot the ECB’s target of “close to, but below 2%”, currently at -0.1% in March. While it is still too early to tell if the ECB QE programme launched on March 9 will manage to bring back inflation towards the target in the medium term, a look at market- and survey-based inf…

Read the article

Competition winners for Richard Koo’s book: 10 copies of The Escape from Balance Sheet Recession and the QE Trap

Richard Koo popped by our office a few weeks ago to discuss his most recent book The Escape from Balance Sheet recession and the QE Trap.  You can see the interview here.  We asked who was the Japanese prime minister in 1997 who oversaw arguably Japan’s biggest policy error post the collapse of Japan’s debt fuelled bubble, and the answer was Ryutaro Hashimoto.

It is perhaps a little harsh to im…

Read the article

An interview with Richard Koo: The Escape from Balance Sheet Recession and the QE Trap

For years the Western world mocked Japan’s attempts to recover from its spectacular debt-fuelled boom and bust, blaming the Bank of Japan for doing far too little and far too late, and lamenting Japanese fiscal stimulus as extreme recklessness, where the only achievement has been to propel Japan’s debt levels into the stratosphere.

Now, seven years after much of the developed world’s own debt …

Read the article