Inflation is dead, long live inflation

When the Federal Reserve and other central banks introduced quantitative easing in response to the global financial crisis, the loudest and most persistent criticism was that such actions would unleash a major surge in inflation. The reality has been very different. Inflation has persistently fallen short of central bank targets and economic forecasts for the … Continue reading “Inflation is dead, long live inflation”

How will central bank tightening affect emerging market bonds?

Investors are worried; they’re hearing noises from the US Federal Reserve and the European Central Bank about reducing balance sheets and hiking rates. They are wondering whether that will have an impact on emerging markets and on Asian bonds. In the past, they’ve been right to worry. Generally, when central banks start tightening, it does … Continue reading “How will central bank tightening affect emerging market bonds?”

Central banks spark confusion

Investors were clearly rattled by the mixed messages emanating from central banks in June, which sparked a sell-off in government bonds. The Federal Reserve at least has been fairly clear about its direction of travel. It has struck a more hawkish rhetoric recently, as policy makers become increasingly confident on the outlook for the US … Continue reading “Central banks spark confusion”

Green is the new black

There is a new breed of bond in the fixed income world. It’s different, it’s bold – it’s the so-called ‘green bond’ market. As the drive towards environmental, social and governance (ESG) investing continues to gather pace, policy makers and investors alike are waking up to the importance – and benefits – of green bond … Continue reading “Green is the new black”

Trump in the White House – all expectations out the window

The election of Donald Trump as the next US president has been a game-changer thus far for fixed income markets, upending all expectations of what will happen next. One thing is for sure, though: Trump’s policies will have a major, far-reaching impact on bond markets. Trump has promised two broad changes – greater fiscal stimulus … Continue reading “Trump in the White House – all expectations out the window”

Will 2017 be as good as 2016?

It is unlikely 2017 will offer as clement an investment climate as 2016, but the outlook is still upbeat. As the New Year dawns, investment managers have some sense of relief if they can report decent positive returns for the year just ended. 2016 was generally a good year for UK investors. UK bonds produced … Continue reading “Will 2017 be as good as 2016?”

How will investments perform in 2017?

Despite political uncertainty, and some notable surprises, UK investors have largely benefitted from some positive trends during 2016. But what does 2017 hold in store for the major asset classes? Equities It remains to be seen whether Donald Trump’s widely-anticipated reflationary policies will pass through Congress. If his planned infrastructure spending aimed at igniting growth … Continue reading “How will investments perform in 2017?”

A chance to bond with China?

Around $155 billion could start flowing into China’s local-currency bond market in the coming year if renminbi-denominated debt is added to influential bond indices as a reward for recent efforts to grant greater access to foreign investors. Over the past year, officials have expanded the types of foreign investors who can invest in the so-called … Continue reading “A chance to bond with China?”

Volatile bonds: What is happening to interest rates?

This year the US, UK and German bond markets have moved together. Whatever the news, rates have followed similar trends and patterns. It is true US rates have stayed the highest of the three, and German rates by far the lowest. In each market rates fell from their highs on 1 January to reach new … Continue reading “Volatile bonds: What is happening to interest rates?”

Return-free risk

Bonds are at the epicentre of what is a highly fragile environment. “Brexit brought forward the size, scale, scope and speed of more monetary policy. No wonder markets are up!” – Former Federal Reserve (Fed) Governor, Kevin Warsh, July 2016 It is often stated that markets hate uncertainty. Like many things this cycle, this notion has been … Continue reading “Return-free risk”

Expect a slow burn in Jackson Hole

Jackson Hole won’t reveal when the US Federal Reserve (Fed) will hike rates again. But it might reveal what the Fed is thinking about where the US is going over the long term. Things have moved on a lot since Jackson Hole started out as a small conference about agricultural economics. It’s now a major … Continue reading “Expect a slow burn in Jackson Hole”