The 2008 Bond Vigilantes Christmas Quiz – the answers and the winners

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…

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Investment grade corporate bond returns – where's the pain been?

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…

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Who cares about the Fed – Deutsche Bank didn’t call one of their bonds this morning. More carnage for the financial bond sector…

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 …

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The 2008 Bond Vigilantes Christmas Quiz

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…

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Credit markets – cracks in the ice?

 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…

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Bond market update – teleconference

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…

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I.O.U.S.A

Dubbed by many as an economic equivalent to Al Gore’s "An Inconvenient Truth," Patrick Creadon’s 81 minute documentary looks at the spiralling US national debt & the huge implications for the world’s largest economy. The thirty  minute version (see here) is well worth the time.

 

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Tonight: the Ascent of Money – Monday 24th November, 8pm Channel 4

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…

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Driven to Bankruptcy?

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…

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Turning Japanese I think we're turning Japanese I really think so

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…

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