Thank you very much for a bumper set of entries to our quiz this year. The answers are shown below – with the spirit of Christmas in our hearts we allowed a small degree of ambiguity on a couple of the questions, but in the end the four people who got 19 out of 20 (and the only one they all got wrong was the impossible question 12) didn’t need any charity. Their names were drawn out of the ha…Read the article
Conventional wisdom says that corporate bonds have performed terribly since the credit crunch broke in July 2007. Yes, BBB rated corporate bond spreads are now wider than they were in the Great Depression, but you may be surprised to know that thanks to falling government bond yields, the average industrial investment grade corporate bond has actually generated a positive total return over the…Read the article
Shock of the morning wasn’t the overnight Fed rate cut to zero-ish, nor the acceleration of their Quantitative Easing programme, both of which we’d expected for some time. The shock came with this press release from Deutsche Bank explaining that they wouldn’t be calling a Lower Tier 2 (LT2) bank bond. This particular bond, a Euro 1 billion issue, was issued as a 10 year deal, but with a call …Read the article
It’s that time again. We invite you to take part in the Bond Vigilantes Christmas Quiz. Please send your entries into us by 5pm on Friday 19 December (email link below). The prize is £100 of Amazon vouchers, with second and third prizes of vouchers for £50 and £25 respectively. The quiz is open to all of our readers, clients or not – although M&G staff members will be playing for a crate of…Read the article
For all the talk of frozen credit markets, the figures showing new issuance may come as a bit of a surprise to some. November has been the most successful month for new non-financial deals this year (see graph on left). Companies have managed to issue new debt in spite of extreme risk aversion, risk aversion that can be seen in the huge sell off in equities and credit spreads hitting all tim…Read the article
Deflation fears meant that November was a phenomenal month for government bonds and investment grade corporate bonds. In local currency terms, US Treasuries returned +5.4% (the best month since November 1981), German government bonds returned +4.0% (the best month since at least 1985) and gilts returned +4.6% (the strongest month since October 1992)
Investment grade corporate bonds also perfor…Read the article
This second episode of historian Niall Ferguson’s series on the story of money and finance, The Ascent of Money, is probably worth a look. It’s apparently going to cover the development and importance of bond markets, and although it includes an interview with a minor US bond fund manager rather than one of your friends at M&G, it will be interesting.
Meanwhile it’s time for a quick competit…Read the article
I’m sure it won’t have escaped most people’s attention that the big American car makers are suffering at the moment – sales by the big three, GM, Ford and Chrysler were down 23% last month. Both GM and Ford announced last week that they have been spending their cash reserves at a hefty pace, and GM has said that it could run out of operating cash as soon as the end of the year.
This has lead so…Read the article
Yesterday it was announced that UK CPI inflation for the month of October was minus 0.2%. The annualised rate of inflation dropped from +5.2% to +4.5%, the biggest year on year drop in UK CPI since April 1992. Inflation expectations have plummeted. The 5 year breakeven inflation rate, i.e. the rate of inflation priced in by the UK index-linked bond market, is now -0.1%. In other words, the U…Read the article