Author profile
Jim Leaviss
Years in the bond markets: 24
Specialist subjects: Macro economics and fixed interest asset allocation
Likes: Cycling, factory records, dim sum
Heroes: Brian Clough, Morrissey, Neil Armstrong
It wasn’t perfect, but it was the best we had
No doubt the main thing that Mario Draghi will be remembered for is his famous “whatever it takes”. He told financial markets that the Eurozone was not about to collapse and made it clear that the ECB would save the banks and peripheral sovereign nations of Europe.
More interestingly, however, is to think about how Draghi found himself in the position to be able to QE and to undertake othe…
Read the article0
The moon landing, the Fed and a “pro-bubble”
Economists usually think of “bubbles” as being negative for economies and societies. Think of the US housing bubble and its role in the 2008 Global Financial Crisis as a great example. Defining a bubble is tricky, and often its causes are difficult to explain even with the benefit of hindsight. In their paper “Bubbles in Society – the Example of the Apollo Program” Gisler & Sornette say that…
Read the article
The Case for People’s Quantitative Easing by Frances Coppola. An interview and a competition
A decade on from the Global Financial Crisis after multiple rounds of QE across the developed economies, we are stuck with mediocre growth rates, the anticipation of renewed policy easing and the prospect of yet more bond buying from the ECB.
Yet much of the academic research into the impact of QE suggests there are diminishing returns from successive bouts of bond purchasing. It also seems…
Watch the videoBeware the widow-maker
Over my 25 years in bond markets, there’s always been one trade that becomes known as “The Widow-Maker”. Being underweight long-dated gilts was one, at a time when new pension regulations sent yields plummeting, and shorting the Japanese bond market also became deadly as the Bank of Japan slashed rates to zero. Today, widows and widowers are being made in the German bund market. Yields on the …
Read the articleWould demutualising Germany’s Sparkassen (savings banks) kick-start consumption growth and give the eurozone a boost?
This week the 10-year German bund yield hit a new record low of -0.33% in the wake of Draghi’s Sintra speech which had echoes of his 2012 “whatever it takes” declaration. Why so dovish? Manufacturing data from the eurozone has been universally bad lately, and inflation expectations are collapsing. The core inflation rate is now just 0.8% and the ECB’s 2% target looks an impossible goal. The mar…
Read the articleBankers & Bolsheviks: International Finance and the Russian Revolution by Hassan Malik. Our interview with the author; and win a copy of his book.
In the years leading up to World War 1, and then the Russian Revolution in 1917, Russia had become the world’s largest net international debtor. It was borrowing heavily to finance industrialisation (railroads, oil, iron and cotton production) and as its population grew it saw rapid economic growth. WW1, and the earlier 1905 conflict with Japan had also resulted in rising debt. At the same t…
Read the articlePanopanic 2018. M&G’s economic and bond market outlook
Whilst you can make some strong arguments for the negative returns from 90% of asset classes in 2018 based on the return of populist politics – think of Brexit, Italy’s political instability, AMLO’s election in Mexico and tariffs everywhere – the answer to those negative returns might be simpler: the de facto global discount rate, the 2-year US Treasury bond yield, has risen by almost 100 basis…
Read the article
Just like 2008? Oil up, ECB tightening – all we’re missing is a credit accident
As we pass the 10-year anniversary of the Lehman default and we started thinking about what we were doing back in 2008 (desperately moving my savings out of certain banks was high on the list for me, whilst listening to MGMT and Los Campesinos; album of the year? TV On The Radio’s Dear Science), I went back to our blog, to see what the early warning signs were in the summer of that year.
It is …
Read the articleLetter from Washington DC. The IMF’s Sovereign Debt Conference.
The IMF recently held a two-day public conference on sovereign debt at its home in Washington DC. How do we measure it? How have governments reduced it in the past, for example in the periods after the two World Wars? How can Japan carry debts of over 200% of GDP while other sovereigns have defaulted with virtually no public debt? And when things do go wrong, how do we sort out the mess of a re…
Watch the videoJapan: weakening growth and inflation, and an unpopular government
I was in Tokyo last week, seeing a mix of economists, JGB experts and clients. I was also awesome at karaoke, dressed as an astronaut.
The last time I was in Japan, over a year ago, I came away thinking there was a decent chance that the Bank of Japan would abandon its zero interest rate policy (ZIRP) as it was damaging banks’ profits, and sending a negative signal to Japanese households and b…
Watch the video