Wednesday’s triggering of Article 50 was a non-event in financial markets; an event more symbolic than anything else. Meanwhile in the US, two Fed officials were discussing their views on what could happen to US interest rates.
We have long written about the dangers of economic forecasting as an input into the investment process. The future is often highly surprising and nobody has a perfect model of how the economy works, which means forecasts will usually turn out to be wrong – just ask any… Read the article
Though they might not admit it now, a number of commentators argued in the immediate post-crisis years that quantitative easing (QE) would cause inflation to rise to worrying levels in countries such as the US and UK.
At the time, I argued this view was likely to be wrong because… Read the article
Eras of political and economic consensus define the risk characteristics of assets; what is risky and what is safe depends on the regime we are living in. As an example, the Cold War era produced very different return profiles and correlations to the ‘neo-liberal’ phase that has characterised… Watch the video
Earlier this year, Matthew Klein at FT’s Alphaville, made a typically punchy and well-argued case for abandoning a cornerstone of the current macro policy framework – the NAIRU.
This inelegant acronym (“Non-Accelerating Inflation Rate of Unemployment”) refers to the rate of unemployment which is consistent with stable inflation.… Read the article
Why is the Bank of Japan (BoJ) trying to raise the rate of inflation? Taking account of its demographic profile, Japan’s economic performance has been impressive by developed world standards, as Anne Richards at Bond Vigilantes recently points out, and the economy appears to be at close to… Read the article
In the depths of market pessimism in the middle of last year Aaron wrote about how investors seemed to have given up any hope of interest rates ever increasing. That now seems a long time ago, at least if you consider market commentary.
It certainly seems… Read the article
Markets remain obsessed with relatively minor changes in US official interest rates expectations. The FOMC revealed that at least three interest rate increases next year look reasonable, slightly higher than prior forecasts of two. No one should be surprised. Given the starting point levels of interest rates, the relative insensitivity… Read the article
There have been many suggestions that the sell-off in government bonds in the US was overdone. The argument was that weakness was a result of Trump’s victory, but that it is far too early to know what Trump will do or the effect it will have. We have some sympathy… Read the article
It might be seen as nit-picking, but when someone asks for your views on the US Dollar, it is right to respond: “against what?”
More attention is being paid to the Dollar at the moment after recent strength. The rise in bond yields since the election and a likely rate… Read the article