100 Days of Milei 100 Days of Milei

The Bank of England Monetary Policy Committee potentially has a problem: it requires data to make its labour market forecasts and assessments, but the unemployment statistics have become increasingly unreliable. This is because the Labour Force Survey participation rate (on which the unemployment figures are based) has fallen below 50% since 2018 and has been as low as 15% recently[1]. What is the solution to this difficult measurement problem? An answer can be found in the classic war film, The Great Escape.

Since the onset of the year, Chinese authorities have embarked on strategic measures to stabilize the capital market and bolster economic growth. The People’s Bank of China (PBOC) has taken significant steps, including a 50 basis point cut in the reserve requirement ratio (RRR) – the largest since 2021 — followed by a historic 25 basis point decrease in the 5-year Loan Prime Rate (LPR). These policy actions have significantly boosted market sentiment, as reflected in the recent uplift in the Chinese stock market. These measures also align with our expectation of a supportive policy landscape in China for 2024.

Portfolio Trading (PT) has seen a sharp rise in prominence over the last few years, establishing itself as an integral part of today’s world of credit trading. Thanks to improved integrated technology, fixed income dealers have made significant advances from the rudimentary embers of trading lists of bonds on spreadsheets over email.   In a PT, a list of bonds is traded on an aggregated weighted average price or spread. This can be executed at any point in time, or against benchmark prices, such as the…

As we step into 2024, inflation figures have significantly decreased from their peaks, and inflation is continuing to make progress towards central banks’ inflation targets. With current interest rates kept in place, real policy rates are beginning to pose constraints on economies. Consequently, there is an anticipation of substantial interest rate cuts by major central banks in the developed world this year, opening the door for additional volatility in bond markets.

The Chinese zodiac, a 12-year cycle that assigns animal signs to each lunar year, is a cornerstone of cultural tradition, intertwining with the five basic elements (wuxing 五行) of Metal (jin 金), Wood (mu 木), Water (shui 水), Fire (huo 火) or Earth (tu 土), to form a complex 60-year cycle. On February 10th 2024, we transitioned from the Water Rabbit to the year of the Wood Dragon.

After last week’s final of the second series of ‘The Traitors’, I have had endless conversations about the human psychology behind the decisions made; how the show could be a reflection of many elements of our society; and about how winning the game requires the most delicate balance of popularity, strategic thinking and perfect timing. I also couldn’t help thinking about how the show links to bond markets and behavioural finance when thinking of some of the shows’ key themes – herd mentality; deviating from…

The yield curve in Japan is reaching intriguing levels. The Bank of Japan (BoJ) has remained resolute, maintaining an ultra-accommodative monetary policy in a world aggressively hiking interest rates to stem inflation.

In the last few days, Chinese authorities have announced a slew of measures aimed at stabilising capital markets and supporting growth in the country. The key policy measures, targeting different segments of the economy, are outlined below: Stock Market On the 23rd of January, Bloomberg reported that the Chinese government is considering setting up a RMB 2 trillion ($80 billion) stabilization fund to support the equity market. The report suggested that policymakers could utilise funds in offshore accounts of Chinese state-owned enterprises (SOEs) to purchase…

Arranging banks (on behalf of bond issuers) typically release the initial price talk (IPT) at the same time as the announcement of a bond deal. It is seen as a crucial tool for new bond price formation and is traditionally stated in yield terms for high yield (HY) and spread over benchmark (or swap curve) for investment grade (IG) bonds. From an investor’s perspective, spreads are the better way to analyse value in a bond because the benchmark rate can change over the course of…

With The Barbie Movie beating both Oppenheimer and Super Mario Bros to the top spot as highest grossing film of 2023 (a cool $1.4 billion), I feel justified in drawing from one of its antecedents, Barbie Mermaidia. Prince Nalu (goodie) leads the Fungi (baddies) into the Carousel of Confusion, a hypnotic whirlpool where one loses all sense of direction, in an attempt to thwart their evil intentions.

I recently attended a panel on emerging market (EM) corporate bonds and one of the speakers mentioned their extra caution (or even avoidance!) in investing in corporate issuers that have only issued a single bond. While the investor did not delve deeper into the topic, this is something I rarely pay extra attention to when investing in sovereign hard currency bonds. Most of the factors that apply to a single bond issue can also apply to an issuer that has issued a series of bonds.

The beauty of procrastinating writing a year ahead outlook is that you can use more up-to-date assumptions in your forecast. Outlooks from the sell-side (and some buy-side too) started arriving in early-November. Assuming it took them a few days to write, edit and have it approved by compliance, it is possible that some of them were written while US treasuries were yielding close to 5%, about 1% higher than they are now. The massive rally in core rates throughout most developed markets since then begs…