Uncle Jim’s World of Bonds

Gilt Market Special

19 Jun 2020

Contributed by Lukas

U.K. debt to GDP just passed the 100% level, and with yesterday’s slightly disappointing Bank Of England policy announcement, there’s going to be ...

The Spinal Tap Theory of Central Banking (“One Louder”). And is there an inflation spike?

16 Jun 2020

Contributed by Lukas

Huge rally in credit today on the back of the Fed’s corporate bond buying announcement. Also I look at a couple of academic papers on the lockdown i...

Robin Hood, Robin Hood riding to Hertz’s rescue?

15 Jun 2020

Contributed by Lukas

Sports bettors have discovered stocks (or stonks in the vernacular), and defaulting companies might just have found a saviour. For bond holders anyway...

“The Looming Bank Collapse”?

12 Jun 2020

Contributed by Lukas

Frank Partnoy wrote an article with that title in The Atlantic, and it’s getting a lot of attention. Partnoy says that CLO defaults are coming and t...

Italy’s new GDP linked bond

10 Jun 2020

Contributed by Lukas

GDP linked bonds have long been discussed as a good option for governments. Italy is now issuing one, aimed at retail investors initially, but could t...

2.5 Million New Jobs

08 Jun 2020

Contributed by Lukas

A huge and unexpected boost to hiring in the US last month saw 2.5 new jobs created, sending the unemployment rate down from nearly 15% to 13%. Credit...

Surprise! The ECB overdelivers.

05 Jun 2020

Contributed by Lukas

It’s all about positive surprises at the moment. The economic data is coming in slightly better than expected and the central banks are ramping up t...

Recessions are Racist

02 Jun 2020

Contributed by Lukas

#blacklivesmatter. Economic slowdowns hit black families hard. On one estimate the economic impact of a downturn is 1.9 times more severe for a black ...

Brexit, the velocity of money, Christopher Nolan’s cheap 747, ESG.

28 May 2020

Contributed by Lukas

Something for everyone in today’s bond podcast...

Argentina & Hertz - defaults coming thick and fast

26 May 2020

Contributed by Lukas

Two big defaults in the past few days, and more to come. Today’s episode also looks at rising U.K. debt/GDP.

The Psychology of Negative Interest Rates

22 May 2020

Contributed by Lukas

Normally cutting rates sends a signal that the economy is getting a stimulus, that the amount of interest on savings is going to fall and therefore yo...

Negative rates, everywhere

21 May 2020

Contributed by Lukas

Having been very sceptical about negative interest rates in the U.K. only a week ago, new Bank of England Governor Andrew Bailey seems to be changing ...

Equity markets and Credit Ratings

19 May 2020

Contributed by Lukas

With central banks and governments promising to support companies in multiple ways, including even buying the bonds of junk bond issuers, you might th...

Debt Jubilees: Moral Hazard vs Fairness

15 May 2020

Contributed by Lukas

In ancient times, at times of general economic distress, such as a crop failure, rulers would “wipe the slate clean” and cancel ALL society’s de...

Deflation in the USA. It’s here.

13 May 2020

Contributed by Lukas

Inflation turned negative in April, thanks to collapsing energy prices, but also as demand for consumer goods, like clothing, fell in lockdown. The Fe...

Negative US interest rates? That’s what the market thinks.

11 May 2020

Contributed by Lukas

Negative yields are nothing new for most of the developed markets, but until the coronavirus hit, the US was a significant outlier. Last week the mark...

Reinhart & Rogoff Revisited

07 May 2020

Contributed by Lukas

“This Time is Different” was an economic hit when published in 2009. It’s a fascinating look at 800 years of government borrowing. But do the er...

Why high government bond issuance doesn’t mean higher government bond yields

05 May 2020

Contributed by Lukas

The US will be issuing around $4.5 trillion of Treasuries and Bills in 2020 - in this episode I suggest we look at demand, as well as supply when we c...

The Winner’s Curse - do you want to “win” a bond auction?

04 May 2020

Contributed by Lukas

Today I talk about bond issuance in both the credit markets and in government bonds. What’s the best way of issuing debt so that both buyers and sel...

Is Trump going to default on China’s US Treasury holdings?

01 May 2020

Contributed by Lukas

There lots of noise this week about the US President’s idea that the Government should default on China’s $1 trillion UST holdings as “revenge”...

Animal Crossing, zero interest rates, turnips.

29 Apr 2020

Contributed by Lukas

Today’s FT has a great article about the slashing of interest rates in this Nintendo Switch game. A monetary policy petri-dish.

Defaults & Zombies

28 Apr 2020

Contributed by Lukas

The annual Deutsche Bank Default Study came out yesterday. It’s always a brilliant read. Defaults are going to be high this year, but probably no hi...

Italy on the credit rating knife-edge. Are the rating agencies too powerful at a time like this?

27 Apr 2020

Contributed by Lukas

S&P kept Italy’s rating at BBB, and Italian government bonds are rallying. But with Moody’s also about to determine its possible action on keeping...

Are Central Banks and Governments simply going to cancel outstanding public debt?

23 Apr 2020

Contributed by Lukas

I once wrote a blog about the possibility of the U.K. government cancelling the gilts held by the Bank of England as part of the QE programme. Is that...

Emerging Markets: currencies down, bonds down.

22 Apr 2020

Contributed by Lukas

As developed market bond yields retest their all time lows, EM is behaving differently. A dependence on foreign capital flows means that they have see...

Debt monetisation: is New Zealand going to make another world “first”?

21 Apr 2020

Contributed by Lukas

The RBNZ suggested last night that they’d consider monetising NZ’s debt. Elsewhere we talk about the fall in bond yields vs currency performance, ...

Falling oil, first defaults, and “orphaned” Emerging Market debt

20 Apr 2020

Contributed by Lukas

Oil prices just collapsed to 20+ year lows, and a couple of high yield energy names have now defaulted, with more to come. In today’s episode we als...

Extend and Pretend: here come the bank waivers

17 Apr 2020

Contributed by Lukas

US companies have aggressively borrowed from their bankers over the last month as their earnings disappear under economic lockdown. The rules of those...

The Fed buys junk

14 Apr 2020

Contributed by Lukas

Last week the US Federal Reserve announced the most startling monetary policy action of any Central Bank in this crisis: it’s going to buy High Yiel...

Did...the Bank of England just announce helicopter money?

09 Apr 2020

Contributed by Lukas

Well, they’d say not, absolutely not, no no no. But the government is going to start using the BoE as a source of financing and will run up overdraf...

The flat Phillips Curve: no inflation in good times, no deflation in bad times?

08 Apr 2020

Contributed by Lukas

The “failure” of the Phillips Curve to show a good relationship between employment and the CPI has been a puzzle for economists. Markets are prici...

World War 2 and the Fed’s Yield Curve Control

07 Apr 2020

Contributed by Lukas

The US Federal Reserve pinned the Treasury yield curve at fixed levels during WW2. This caused some dislocations once the war was won, but eventually ...

No Coronabonds - but the next best thing? And a look at rising UK inflation expectations.

06 Apr 2020

Contributed by Lukas

The idea that the eurozone was going to get together to issue Coronabonds to deal with the economic impact of the pandemic was always optimistic - but...

Follow the flows

03 Apr 2020

Contributed by Lukas

The latest data for client flows in the US mutual and ETF market show that the outflows might be moderating, and that high yield funds are very much i...

The Black Death and bond markets

02 Apr 2020

Contributed by Lukas

There’s a great Andy Mukhergee article on Bloomberg which looks at the economic impact of the Black Death in the 14th century. It draws on Paul Schm...

How did we go bankrupt? Gradually, then suddenly.

01 Apr 2020

Contributed by Lukas

Part 2: yesterday we looked at the extent of fiscal expansions around the world and the impact on debt/GDP ratios. Today we look at the three things g...

Are we all going bust?

31 Mar 2020

Contributed by Lukas

Part 1. Sovereign Debt to GDP ratios are going to increase by 10% to 25% over the course of this coronavirus crisis. It’s the right thing to do, but...

Not now, credit rating agencies!

30 Mar 2020

Contributed by Lukas

Fitch downgraded the UK’s credit rating on Friday, citing the increased borrowing it will need to take on the pay for the Coronavirus economic packa...

Fallen Angels

27 Mar 2020

Contributed by Lukas

It’s expected that there will be hundreds of billions of dollars of investment grade bonds getting “junked” this year as economic conditions det...

Coronabonds: is Europe ready for jointly guaranteed debt yet?

26 Mar 2020

Contributed by Lukas

9 Eurozone nations have suggested that the bloc issues jointly guaranteed bonds to help finance the response to Coronavirus. Germany isn’t keen - ye...

Them’s the breaks.

25 Mar 2020

Contributed by Lukas

US inflation expectations have COLLAPSED through this crisis, and some market expectations for future prices elsewhere in the world are now anticipati...

More defaults than the Great Depression?

24 Mar 2020

Contributed by Lukas

The level of defaults priced in to corporate bonds - both investment grade and high yield is pretty extreme. How does it compare with the worst period...

Uncle Jim’s World of Bonds (Trailer)

23 Mar 2020

Contributed by Lukas