Recent capital flows highlight a paradox: investors are afraid of inflation, but seem to have increased their allocation to just the assets that would do worst out of it.
Continue readingTag Archives: investing in bonds
Inflation is not transitory after all
“Transitory” is the preferred word to describe inflation these days. Central bankers love it, because it means they can continue their easy money policies. Investors love it, because it means the markets’ party goes on.
Continue readingClimate change could be the market’s next Black Swan
Even those who still do not believe that climate change is a serious threat to our way of living will need to pay attention: it could turn out to be the next Black Swan for financial markets.
Continue readingBeyond the Covid-19 crisis, forecasts may be too optimistic
The Covid-19 crisis is one year old, and already, on the economic front at least, optimism is gaining ground.
The International Monetary Fund (IMF) economic growth projections, released last week, point to a strong rebound: the world economy is forecast to expand by 6% this year, led by emerging and developing Asia, which is expected to grow by 8.6%.
Continue readingThe Fed starts a dangerous dance with the market
With baby steps, the Fed and other major central banks are beginning their journey back towards some semblance of normality.
This will be a big resilience test for a financial system which, for more than a decade, has relied on repeated rounds of monetary generosity. Continue reading
Market turmoil tests the power of central banks
The turmoil we are currently seeing in stock and bond markets is just one battle in the war that has been going on in capital markets for a long time: debt versus equity versus central banks.
Continue readingLook at Covid-19 vaccines to gauge inflation tantrum odds
With news of another Covid-19 vaccine on its way and optimism rising ahead of the end-year holidays, it looks like 2021 will shape up to be much better than 2020.
But one forgotten danger could spoil the party: inflation. Price rises are far from investors’ minds, but an ‘inflation tantrum’ could have devastating effects on various countries’ economies if they are not kept in check.
Fast and furious rally risks triggering the Sell signal
The markets rallied so fast in November that bullish investors risk pushing the needle towards the “Sell” signal, according to Bank of America’s indicator.
Stricter liquidity and leverage controls may be coming
If you are wondering what’s behind the sudden largesse of the European Central Bank (ECB) when it comes to purchases of bonds, you may find a recent speech by an ECB official at a conference about financial stability enlightening.
While regulators focused on making banks safer following the 2007-2009 financial crisis, the non-bank financial sector has been allowed to continue without the same stringent requirements for liquidity and leverage. This gap came into sharp focus during the crisis caused by the Covid-19 pandemic.
Was Dominic Cummings pushed to save the pound?
The abrupt fall from grace of Dominic Cummings, the much-admired and much-loathed adviser to UK Prime Minister Boris Johnson, has sparked all sorts of theories as to what was behind it, and with good reason.
Cummings’ actions have been divisive and often controversial, starting with his choice of “misfits and weirdos” to replace civil servants whom he sacked unceremoniously, to the famous drive he took across the country while both he and his wife were ill with Covid-19 and a national lockdown was in place.