We have opined on many occasions about the call features on bank debt and have long argued that investors and issuers should price these securities on economic rather than emotional grounds (for more detail, see Jim’s blog on Deutsche Bank being the first not to call a Lower Tier 2 bond in 2008).
However, even we were surprised late last week when Intesa SanPaolo decided to amend the terms of s… Read the article
In the true spirit of October 31, today we thought we would try our best to try and scare you. Five charts, each more scary than the last.
1. Capital fright
Uncertainty in Europe is having a significant impact on investor and consumer confidence. This is manifesting itself in a flight to quality for capital, which the below chart highlights rather well. Most economists agree that capital fl… Read the article
Since the middle of this year, credit spreads on peripheral sovereigns have narrowed considerably. Having been as wide as 600 bps, Spanish 5 year CDS is now around 300 bps, Italy is down from 500 bps to 250 bps. Ireland now trades at just 200 bps. Now at least part of this performance can be put down to Draghi’s speech in July in which he said “within our mandate, the ECB is ready to do what… Read the article
Last week Jim attended the annual meetings of the IMF and World Bank in Tokyo. For Bond Vigilantes, he took the camera along and documented his trip. Jim told me that the IMF and World Bank meetings, and even more the conversations and debates beyond the formal schedule, gave him some interesting food for thought. With the fiscal cliff arising and the UK’s failing experiment with austerity, Oli… Read the article
Given the success that central banks have had in targeting inflation over the last decade or so, the recent increase in their powers, and the broadening of their remit to include economic growth, has been largely welcomed by the markets. But have we put too much faith in central banks abilities? And, with record levels of peacetime government deficits and the clear political incentive to tolera… Read the article
The latest IMF World Economic Outlook came out last week with much fanfare amongst the press and financial markets. We think the IMF produces some absolutely stellar stuff, as we have highlighted here and here in the past. But the forecasts in the IMF WEO, its flagship publication, are laughable. What makes the IMF think that it can forecast five months into the future, let alone five years?
We… Read the article
On the 9th October 2007 the totem pole of capitalism, the S&P 500, peaked at 1,565. Last night it closed at 1,441. So, five years into the crisis, where are we in terms of clearing up the banking crisis?
There’s good news in the US. We have commented on the initial driver of the crisis in the world’s largest economy – the boom and bust of the housing market – on many occasions. Recently, we’ve … Read the article
This post was originally published on 5.10.2012 in English and has been translated for our French readers.
Depuis le début de l’année 2011, la croissance économique de la France s’est révélée extrêmement décevante, en passant d’un rythme annuel de près de 2,5 % à tout juste 0,3 % au second trimestre 2012. Certes tous les pays de la zone euro ont été à la peine durant cette même période, mais la… Read the article
Earlier this year, Stefan highlighted the potential for sovereign debt downgrades to push big European companies into high yield territory becoming “fallen angels”, issuers downgraded from investment grade to high yield. This is something the Financial Times has also recently picked up on. The chart below shows how near the average European sovereign ratings are to sub-investment grade.
Rating… Read the article
Since the start of 2011 French economic growth has been extremely disappointing, falling from an annual rate of nearly 2.5% to just 0.3% in the second quarter of this year. Of course the whole Eurozone has seen weakness over the period, but French growth has lagged that of the “core” over the period. German GDP growth was at or above 2% for all but the last two quarters, and now stands at 1%…. Read the article