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Thursday 3 April 2025

The UAE, the USA, and the value of rules based engagement The UAE, the USA, and the value of rules based engagement

It’s only been two months since he took office, but Trump’s policy agenda has taken the world by storm. The new US administration has upended a lot of the norms, standards, institutions, alliances, and indeed most rules of engagement, that we have come to take for granted. The speed, breadth and scale of the attempt to re-orient America’s institutional architecture is unprecedented. Whether intended to be strategic or not, such changeability in policy frameworks is uncommon for developed markets. History would suggest that if the...

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Blast from the Past Blast from the Past

18 years of comment

Discover historical blogs from our extensive archive with our Blast from the past feature. View the most popular blogs posted this month - 5, 10 or 15 years ago!

Blast from the Past Blast from the Past

18 years of comment

Discover historical blogs from our extensive archive with our Blast from the past feature. View the most popular blogs posted this month - 5, 10 or 15 years ago!

March 2025

The cost of security: The impact of higher defence spending on debt-laden nations

In an era of rising geopolitical tensions, many nations are ramping up defence spending to bolster security. However, for countries already burdened with high debt, this creates a fiscal dilemma: how to fund military expansion without worsening financial instability. Nowhere is this debate more pressing than in Europe, where Germany—historically the continent’s fiscal anchor, undertook a historic change to its fiscal policy.

Asset allocation: a new perspective with the ‘WOOLY curve’

When analysing long-term investments, the primary focus is naturally on the potential total returns. Your final profit is simply a function of the future actual returns of the investment, less the original cost. In the realm of fixed interest bonds, this calculation is relatively straightforward. For instance, you can estimate the likely return using the redemption yield, as the coupon is set, and the redemption date and value are known. This predictability allows for a clear definition and  a strong approximation of future profits. However,…

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Auf Wiedersehen, Schuldenbremse. Hallo, Sondervermögen.

Admittedly, as a native German speaker, I may be biased. But I genuinely believe that the German language has given the world some of the most ingenious and downright beautiful expressions. And I don’t say that just out of patriotism—words like Schadenfreude and Zeitgeist have become global hits. Now, I think it’s time for investors to forget one German word—Schuldenbremse—and add another one—Sondervermögen—to their vocabulary.

February 2025

What’s so special about 4.7-year bonds?

“How are you going to screw me?”…That’s a question a US investor asked an investment banker who was offering a trade that seemed too good to be true. Michael Lewis told the story in a 2008 article, when, understandably, trust in Wall Street banks wasn’t at its peak. I think it fair to say that, thanks to changes in regulation and culture, many of the games played on investors pre-GFC (Global Financial Crisis) are far less common today (does anyone remember CDO-squareds?). But the banks still have smart people who are capable of finding little gimmicks that make trades look better than they really are at first glance.

Three things to love about bond markets this Valentine’s Day

This time of year is for thinking about the ones we love. For those of us who spend their working week in the corner of the 7th floor at 10FA, that ‘one’ is bond markets. When I was thinking about what I wanted to say in this blog, I was going to write about ‘what to love about bond markets now’. But of course, you don’t love only someone or something for what they offer right now, you love them throughout the economic cycle. So…

Growing a new skin in the year of the green wood snake – the China bond market way

As part of our annual tradition, we reflect on what happens and how the investment world would look when Chinese astrology intersects with the world of finance.  In the Chinese zodiac, the snake symbolises wisdom and agility, while the wood element represents growth, flexibility and tolerance, nurturing the fire element that signifies vitality and change. This year, we focus on the China onshore bond market, where opportunities are emerging as the country continues to forge new paths through economic restructuring. A new skin for China’s…

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