Tag Archives: Interest rates

By Marc Chandler Originally published on Marc to Market There is a general understanding of what happened last week. The 2.9% rise in average hourly earnings in the US reported, the fastest since 2009 spurred fears of rising inflation. The jump in US interest rates triggered equity sales and a spike in volatility, which in turn spurred the unwinding of low vol bets that had been paying off handsomely. While this consensus narrative has much to recommend itself, there is a...

Ed Harrison on Ray Dalio on bonds.Credit Writedowns Ray Dalio: We are already in a bond bear market right nowEdward Harrison

Brian gives a simple and accessible explanation of bond market dynamics based on his considerable experience in the field as a "quant."Bond Economics The Highly Predictable Treasury Bond Bear MarketBrian Romanchuk

By Marc Chandler (originally published at Marc to Market) Germany does not have a government, though the election was more than three months ago.  Spain, Portugal, and Ireland have minority government.  Austria is the first government since the financial crisis to include the populist right.  The EU is trying to press Visegrad group of central European countries to conform to the values of...

The Financial Times asked economists the following: How far will the Bank of England raise interest rates next year? Do you think they should? PRIME economists responded in this way: We think much will depend on the Federal Reserve and the ECB. The BoE will follow both, but will have time to assess the impact of global tightening. We do not think that rate rises would be wise at a time of weak demand, low productivity and heavy corporate and consumer indebtedness. Thanks to austerity,...

The flatter yield curve is not a recessionary signal, so what is it telling us? Much of this year’s earlier yield curve flattening represented a reversal of the 2016 steepening that accompanied surging economic growth and inflation expectations after the U.S. presidential election. Markets had bet that fiscal stimulus and infrastructure spending would spur growth and inflation. Long-term yields jumped in response. Those market expectations unwound over the course of 2017 when policy changes...

The big picture then is this: a global economy into its ninth year of the business cycle that is starting to gain momentum with the US flirting with 3% growth and 4% unemployment with richly priced asset markets but a flattening yield curve. We’ve seen this picture before.… In retrospect, one could argue that the Fed’s late interest rate hike campaign was a policy error – that the Fed should have seen the flattening yield curve as a canary in the coal mine and resisted raising its policy...

Bank of England increases interest rates for the first time in a decade in order curb high inflation squeezing UK households Base rate lifted from 0.25pc to 0.5pc; Mark Carney will give a press conference at 12.45pm to explain the central bank's decision Bank of England last hiked interest rates in July 2007; interest rates fell to historic lows to help the UK economy recover from the financial crisis Pound plunges on currency markets on dovish commentary from the central bank The...

In Post 20, a lot is said about the role that the rate of return on financial instruments—the interest rate—plays on the pricing on securities, but little was said about what determines that rate of return. Two competing theoretical frameworks explain what influences the interest rate, one of them emphasizes the role of real factors and the other emphasizes monetary factors. New Economic PerspectivesMoney and Banking Post 21: The Interest RateEric Tymoigne | Associate Professor of Economics...

In a speech in London the other day, Peter Praet discussed the ECB's unconventional policy measures. I was there, and I have to say that he deviated considerably - and rather entertainingly - from the version of the speech on the ECB website. But his core message was still the same: "Rates are expected to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. So, no interest rate hikes for a long time to come.But that's not what...