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”

The US Federal Reserve – Birds of a Feather

What do you get when you cross a hawk with a dove? A fair amount of confusion, if the US Federal Reserve (the Fed) is anything to go by. At this year’s Jackson Hole gathering of the world’s central bankers, Fed Chair Janet Yellen declared that ‘the case for an increase in the federal funds … Continue reading “The US Federal Reserve – Birds of a Feather”

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”

Worries should rise when complacency builds

A new Bank of England index measuring uncertainty shows investors are remarkably complacent about Brexit. The Bank’s Quarterly Inflation Report now contains an uncertainty index. It pulls together a range of market, survey and forecast variables to show how much uncertainty there is during a particular month compared to the historical average (or what you … Continue reading “Worries should rise when complacency builds”

Monetary policy: a bridge over troubled waters?

“The European Central Bank’s actions can only build a bridge to the future. The project must be completed through decisive actions by governments – both individually and collectively – to address the underlying causes of our current challenges.” – European Central Bank President, Mario Draghi, September 2012. Eurozone:  And friends just can’t be found Mr … Continue reading “Monetary policy: a bridge over troubled waters?”

Does the world need more quantitative easing?

Should central bankers be contemplating more quantitative easing? It is clear that many still are: even though the Bank of England kept rates on hold at this month’s policy meeting, many are anticipating further stimulus in August. The ECB and Bank of Japan continue to print money, while the Federal Reserve shows itself reluctant to … Continue reading “Does the world need more quantitative easing?”