Panoramic Outlook: Jim Leaviss’ view of the year ahead in bond markets

Oscar Wilde supposedly once said that ‘everything popular is wrong’. Well, the overwhelming consensus at the start of 2014 that bond markets were not a great place to be invested turned out to be very wrong indeed. The relentless march lower in bond yields, and thus strong performance from government bonds and investment grade (for example, sterling IG has returned more than 10% so far this yea…

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Jim Leaviss’ view of the year ahead in bond markets

It has become customary in recent years for January to begin with strategists making dire predictions for bond markets. And yet 2014 has, like its immediate predecessors, conspired to confound the vast majority of these expectations. While equity markets have delivered decent returns in the main this year, the predicted bond market rout has failed to materialise.

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M&G Bond Vigilantes Christmas Quiz 2014

Here is the 8th annual Christmas Quiz. 20 questions, and the closing date for entries is midday on Tuesday 23rd December. Please email your answers to us at bondvigilantes@mandg.co.uk. The winner will get to choose a charity to which we will donate £200. He or she will also get a copy of “Anger is an Energy”, John Lydon’s new autobiography. Four runners up will also get a copy of the book. Good…

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The Chinese corporate bond market – a video

I was in Hong Kong a couple of weeks ago to find out more about the Chinese corporate bond market. To start with it’s huge, and growing rapidly. But it comes with some well-known challenges – the large weighting towards property debt, the lack of information about issuers (ratings tend to be done only by the domestic ratings agency), and perhaps most worryingly the issue of structural subordina…

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Long-dated UK government bond yields are closely correlated to nominal GDP growth

War Loan called. Yay. Quick thoughts…

It has finally happened: the DMO has elected to call and refinance the 3 ½% War Loan, which at almost £2bn in size is by far the largest perpetual gilt outstanding. We’ve been banging on about this for years (see comment from 2011 here), and Jim is worried he hasn’t got anything to write about anymore. Jim typed up a few thoughts after the much smaller 4% Consol was called in October, here are …

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An interview with Ed Conway: The Summit, the story of Bretton Woods. And win a signed copy of the book.

Last week, Sky’s Ed Conway came in to talk about his brilliant book “The Summit”, the story behind the Bretton Woods conference that tried to organise the structure of the global economy in the aftermath of the Second World War, and enshrined the dominance of the US dollar as the world’s currency.

book

The conference took place as the war was still raging, both in Europe in the weeks after D-Day, a…

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China research trip – A look at the Chinese property market and shadow banking sector

There is a lot of debate surrounding the future of China’s economy. There are the pessimists, who will cite the inevitable collapse of a debt-powered housing bubble.  There are others that say these concerns are overblown and that despite slowing, China is still the world’s second largest economy and its growth rate is far superior than anything seen in the developed world.

From time to time we…

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Corporate bond spreads

EM corporate bonds: spreads are attractive compared to developed markets

Emerging market (“EM”) corporate bonds are a fast-growing segment of the fixed income market. The hard-currency (USD, EUR, GBP and CHF) EM bond market has doubled in size since 2010 and is now worth over $1.3 trillion – which makes it as big as the US high-yield market. Including local-currency bonds, the Bank of International Settlements estimated that the EM corporate bond market was worth ne…

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Mini Bonds – who is buying them?

One of the many unintended consequences of structurally low interest rates over the past few years has been the emergence of mini-bonds in the UK. These are typically non-tradable debt instruments issued by companies directly to individual investors*. We’ve commented before on one such bond issued by Chilango, a London based vendor of Mexican food, and highlighted some of the risks relative to …

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“A grip on the public finances”. Redeeming war loans as UK borrowing rises.

As you know, we’ve always been fascinated by the UK’s War Loans and have written about them repeatedly on this blog (here’s what we wrote in 2011 when we suggested that they should be redeemed). Bonds and war go together hand in hand, and for most of history rising government debt levels have been directly caused by the cost of financing conflicts, or the reparations afterwards. The several out…

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