The Bank restarts the printing presses but will it boost aggregate demand?

Re-starting the printing press – Reading about the Bank of England (BoE) cutting the bank rate to 0.25% and re-starting quantitative easing (QE) while I was away got me re-thinking about the effectiveness of monetary policy and how exactly QE is supposed to deliver higher growth and inflation. It is well understood that the economic […]

22 August 2016 by Chris Iggo

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Central banks remain key but governments could and should issue long dated debt

News reporters, political analysts and lawyers are certainly the occupations in most demand in this year of surprises. The 2016 ‘Almanac of World Events’ will be a mighty tome. On the whole, events have reinforced feelings of pessimism amongst investors, only lightened by the promise of cheap money forever. But it is not all bad. […]

25 July 2016 by Chris Iggo

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Low yields are the curse of our times

Low yields are the curse of our time, being inextricably linked with fears of deflationary growth. There is always scope for short term periods of yields moving higher but a return to significantly positive real yields on risk free assets relies on a fundamental policy change. There are more and more unintended consequences of the […]

11 July 2016 by Chris Iggo

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Is it time to ditch EU and UK austerity asks Axa IM’s Chris Iggo. Long term bonds may be how to do it

The tumultuous events of the last week have left a very dark cloud over Great Britain. There is a political crisis, a constitutional crisis and potentially an economic crisis. Oh yes, for England at least, there is a football crisis as well. With resignations all around we give thanks for Mark Carney and his promise […]

1 July 2016 by Chris Iggo

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Our view on fixed income hasn’t changed much – investors still need yield

The markets and the bookies got it wrong. Britain voted to leave the European Union. As expected, the decision triggered a huge risk-off move in financial markets with the pound sinking to its lowest level against the dollar since 1985.   Bond yields are lower because of the flight to safety. In the credit markets, spreads […]

24 June 2016 by Chris Iggo

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Bond markets confronted by the paradox of thrift

Knowingly or otherwise, bond investors have entered a deal with the devil. Capital will be preserved by policy, at the expense of the return the holders of capital receive on their bonds. As time goes on and the less confidence markets have in central banks being able to deliver reflation, the deal becomes even more […]

17 June 2016 by Chris Iggo

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ECB negative rates may be counter-productive by encouraging cash hoarding

The Federal Reserve (Fed) may not hike rates next week but financial conditions are easier today than they were in December at the time of the first move. Unless there is more evidence that the US economy is slowing down, markets will have to price in some increases in rates after June. However, the Fed […]

12 June 2016 by Chris Iggo

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Risky assets perform well in expansions, safe assets in downturns – the problem is we don’t know where we are going next

It is an indisputable general point that risky assets perform well in economic expansions and safe assets perform well in downturns. The problem at the moment is that we don’t know where we are going next. Indicators suggest that we could see economic expansion or contraction. At the same time valuations are not particularly attractive. […]

20 May 2016 by Chris Iggo

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Now is not the time for heroics when markets are relatively expensive

Prospective returns from developed equity and bond markets are unexciting given the tepid growth outlook. It’s an investment environment that favours conservative strategies focused on sustainable income from diversified portfolios that have some kind of internal hedge. Dividend focused equities, short-duration high yield, inflation linked bond break-even spreads and peripheral debt are interesting plays at […]

15 May 2016 by Chris Iggo

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US Treasuries could be a hedge against Brexit

6 May 2016 by Chris Iggo

Bonds

Political events can be key market drivers and ahead we have the UK referendum, renewed Spanish elections and the big one in the US later this year. However, markets are reasonably calm at the moment having experienced a strong two month performance. The time might be right to take a little risk off the table […]

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