Johnson Clears Path to Fiscal Stimulus
Next month’s budget now has the green light to be Johnson’s fiscal bazooka, with tax cuts, housing schemes and infrastructure projects already mooted.
Insights Topic
Monetary Policy
A Fond Farewell to the Unreliable Boyfriend?
In what was Mark Carney’s last meeting as governor of the Bank, the MPC delivered a mixed message.
The BoE Should Wait and See
A rate cut now makes very little sense to us, and wastes one of the few bullets the BoE has left in its armoury. If they do decide to cut next week, we think it will be reversed within 12 months.
Draghi’s Parting Shot Will Not Be Enough
Yesterday we most likely witnessed Mario Draghi’s last monetary policy package. The European Central’s next meeting on October 24 will be the president’s last, and given the extent of the measures unveiled on Thursday it is looking like a non-event.
An ECB Rate Cut Will Make QE Inevitable
The European Central Bank faces quite a conundrum ahead of its upcoming monetary policy meeting on September 12. ECB President, Mario Draghi, has clearly signalled that a cut to the refinancing rate (currently at minus 40bp) is likely and markets are now pricing this in with an 85% probability. The problem is, the ECB has also signalled that it will simultaneously consider tiering the bank reserves this rate actually applies to.
Have Bonds Ever Been This Expensive?
The average yield of the bond market today is 1.46%, while its average duration is 7.05 years, going by the widely used proxy of the Barclays Multiverse Index.
An Italian Summer Renaissance?
Since the two anti-establishment parties (The League and Five-Star) formed a coalition and took control in Italy, markets have been uncertain on the domestic government policy that was promising many things to many people and ultimately creating considerable friction with the European Commission (EC).
Taking Back Control
It was a dramatic night last night as the Fed cut interest rates by 25bps, the first cut since December 2008, along with the premature ending to the balance sheet run off – however markets hardly moved!
Slim Premiums a Signal for Caution in High Yield
Over the past few weeks there has been a noticeable increase in high yield new issuance, bringing a welcome flurry of activity to what has so far been a relatively benign year.
Is Bank Tightening Ammo For ECB Stimulus?
The euro area bank lending survey for the second quarter of 2019, released yesterday, suggests European banks are becoming more cautious and beginning to tighten lending criteria to various parts of the economy.
Powell Talks the Market Down
The dust is slowly settling after Wednesday’s FOMC rate decision, and more importantly the following press conference where Chairman Jerome Powell literally talked the market down.
With ABS Spreads at Pre-QE Levels, Where is the Value?
Bloomberg reported on Monday that since the European Central Bank started its Corporate Sector Purchase Program (CSPP) in June 2016, it has purchased €177bn of investment grade rated corporate bonds. Initially, as expected, spreads tightened rapidly, but since the first quarter of 2018, they have been gradually widening back out to pre-CSPP levels.