Managing global fixed income in a negative-yielding world
Bear with me for a second as I review some investors’ “favourite” (predominantly negative yielding) bond market: Japan. At the start of this year, the universe of Japanese government bonds yielded somewhere in the vicinity of 0.3%. Today, they yield -0.1%. That...read more
I’ve had enough of the military analogies for unconventional monetary policy, bazookas and all that. It’s time for something new to freshen up this dull global deflation story. I just watched the clip from the movie Pulp Fiction where John Travolta plunges a massive adrenaline shot into an unconscious Uma Thurman’s chest and thought, that’s...read more
Investors with long dated liabilities such as defined benefit pension plans and insurance companies are familiar with the use of long government bonds to hedge their interest rate exposure. The most successful of these organizations, have followed a disciplined approach to progressively add to their liability...read more
Political turmoil in the U.K. continues as predicted in a previous blog post. Until the Conservatives choose a new leader in early September, who is going to lead the Brexit negotiations and with what mandate and authority? It is at this time that we would expect Article 50 to be invoked, starting the formal negotiations on Britain’s exit. ...read more
We are one week from the Brexit vote and since writing on the subject two weeks ago, the “leave” campaign has gained momentum and appears to be ahead of the “remain” camp in most opinion polls. The accuracy of these polls is suspect and as such, the best pollsters are left saying the outcome on June 23 is a coin toss.
What we do know...read more
The U.K. Referendum, on whether to stay in the European Union (EU), vote will occur on June 23.
Market Impact: Greater long term uncertainty irrespective of the result, heightened volatility and higher risk premiums.
The “remain” campaigners are painting a dire economic picture if Britain leaves the EU while the...read more
The first quarter of 2016 has been marked by additional monetary easing by major central banks venturing further into negative interest rates and direct credit easing in response to a weakening global economy. It is a symptom of the ongoing global debt default that to support the current market valuations (and avoid a crisis of confidence),...read more
Developing currency management strategies, and executing on them, is an integrated and multipart process. Market positioning, capital flows, interest rates, geopolitical risks, economic fundamentals, technical analysis (and the list goes on), collectively contribute to currency direction. Experienced currency managers tend to increase their...read more
Within the first few weeks of 2016 the Canadian dollar has dished out pain and joy in abundance. The irony is that within a single month both bulls and bears experienced these emotions in extremes. The currency first fell dramatically in the early part of January only to fully reverse by early February.
How does one manage these risks...read more
There's an old joke in economics that goes: "The questions never change, but the answers always do". The unconventional answers that central bankers have developed over time to solve the lack of inflation (or in some cases deflation) are Quantitative Easing (QE) and Zero/Negative Interest Rate Policy (...read more