Fed officials have been particularly vocal about the slope of the yield curve this week (most notably here and here), in particular voicing concerns over a possible curve inversion (when yields on short dated bonds rise above those on long dated bonds).… Read the article
After performance weakness in the immediate aftermath of the Brexit referendum, UK property delivered a strong return in 2017. In the first of two guest posts looking at the property environment in different parts of the world, Tony Brown, CIO of M&G Real Estate, discusses where this leaves us in… Read the article
Despite the fact that interest rates determine all asset valuations, there is nothing close to a general theory of interest rate determination. In 2016, I wrote about the flaws of a belief in an equilibrium rate of interest (typically known as R* in the academic literature) and the overemphasis… Read the article
Last month, Tristan Hanson and I made a proposal for a sovereign wealth fund (‘SWF’). It triggered a substantial debate. How would it operate in practice? Are we trying to fund investment or earn an equity risk premium? How do we address problems associated with state-ownership? How… Read the article
The flattening of the US yield curve has inspired much commentary and hand-wringing in certain quarters lately. The concern is overdone.
Looking back at periods of rising US policy rates over the past 30 years, history would suggest there is nothing remarkable about today’s level of long-dated bond yields relative… Read the article
Last week, Japanese Prime Minister Shinzo Abe called a snap election trying to capitalise on increased public support over the summer, as the North Korea issues intensified. If the election result was to grant him a larger majority, it will enable him more room to proceed with his economic plan.… Read the article
As if the stellar returns of bitcoin this year weren’t enough, the cryptocurrency gained more attention last night as JP Morgan CEO Jamie Dimon called it a ‘fraud’ that will eventually blow up. In this post, which originally featured on Eric Lonergan’s Philosophy of… Read the article
With Korean missile launches, Trump’s tweets, Hurricane Harvey, NAFTA negotiations and Brexit battles, journalists have plenty to keep themselves busy.
Of course, some of today’s headline-grabbing events might bring profound and unexpected change with lasting impact on global financial markets. But then again, they may not: devastating local events such… Read the article
Political developments have dominated market commentary for much of the last two years. However, such commentary is often overly focused on short term considerations: trying to forecast short term price moves around elections, or considering which areas of the market will be the winners and losers from particular polices. In… Watch the video
The defining characteristic of US economic data since the financial crisis is not stagnation, but stability. We all look back on the Great Moderation with incredulity at the hubris of economists. But has reality morphed into the Greatest Moderation?
There was always a kernel of truth in the… Read the article