Bond vigilantes at the gates in Italy

The 2019 budget target was unveiled on 27 September 2019, with the government defying the advice of Giovanni Tria, Italy’s Minister of Economy and Finance. Tria had recommended a deficit1 of 1.6% of GDP; however, the target has been set at 2.4% of GDP. Italy is now on a collision course with the European Commission, … Continue reading “Bond vigilantes at the gates in Italy”

The Only Game in Town

The US stockmarkets were the only game in town in August. US stockmarkets provided the only positives in August posting another month of strong gains due to robust economic news-flow.  However, all other major global regions showed negative returns, with geopolitical issues and trade war concerns weighing on investor sentiment. The overall result was a … Continue reading “The Only Game in Town”

Hubris and Nemesis: insights into the financial crisis

Ten years ago, the demise of Lehman Brothers marked the height of the financial crisis. At the time, I was an economist at one of the UK’s largest financial institutions. Working there gave me abundant insights into the psychological biases at play, both in that institution and in the companies that it supported. Many of … Continue reading “Hubris and Nemesis: insights into the financial crisis”

Doom Loop

The most likely candidate for the next ‘Lehman moment’ is in Europe. In some ways the regulatory response that followed in the years after the collapse of Lehman Brothers has been a success. The days of racy balance sheets chasing outsized profits on wafer thin capital are largely over; replaced by a mantra of prudence … Continue reading “Doom Loop”

The growing role of China and India in emerging market bonds

Diversification across asset classes has become an essential part of investing for the long term. Investors are increasingly looking further afield to deepen their portfolio diversification and lower total risk as they seek attractive returns. The EMD asset class will continue to see strong growth and we believe that China and India will become increasingly … Continue reading “The growing role of China and India in emerging market bonds”

Walking on sunshine

Some key factors that have influenced investment markets in recent weeks are discussed below. A positive month for stockmarket investors. Having seen signs of investor nervousness in June, last month saw investors regain their appetite for risk, and it proved to be a sunny climate (matching the weather) for most global stockmarkets. The overall result … Continue reading “Walking on sunshine”

What can we learn from the shape of the yield curve?

Surveys of investors show a distinct degree of nervousness this summer. One reason may be President Trump’s propensity for off-the-cuff Twitter activity, taking aim at Turkey, NATO, and Iran, the global trading system or any of his other enemies. Another explanation is rather more technical – prosaic, even. But it also illustrates how caution about … Continue reading “What can we learn from the shape of the yield curve?”

Investors dump equity in favour of safe havens

Government bonds received a boost in demand last month as investors’ risk appetite was tested by volatility in equity markets. This risk-off attitude proved negative for corporate bonds, however. The looming threat of a trade war between the US and China sent shockwaves throughout equity markets last month, as investors braced for the impact of … Continue reading “Investors dump equity in favour of safe havens”

Choosing assets for a portfolio

Asset allocation is central to creating a portfolio. The investor has to decide how much, if any, to have in shares, or bonds, or property. Those big picture decisions usually have the biggest impact on how much money you make or lose. At Charles Stanley we spend a lot of time and effort trying to … Continue reading “Choosing assets for a portfolio”

China points to the financial future

Last time I was in Beijing, I stopped to buy some sausages from a street vendor outside the Forbidden City.  They cost only a couple of yuan, yet the lady selling them was happy to take payment on her phone using the Alipay app. I don’t know what she did with the proceeds. But she … Continue reading “China points to the financial future”

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”