Uncle Jim’s World of Bonds

Corporate bonds have rallied massively from the distressed levels we saw in Q2 this year. What are current spread levels telling us about expected defaults?

New Bank of England research says “yes”.

Inflation numbers are coming in for September and they are terribly weak in Europe. The ECB is worried. Might they, like the Fed, change their inflation target?

Who’s really best for the economy, Republicans or Democrats? Paul Krugman has the answer. Also a remarkable academic paper is damning on Central Banks’s QE analysis!

Today I look at the year to date total returns of bonds and stocks, as well as at the dispersion of price changes within the official inflation numbers. Bike prices are up 6%, men’s’ suits down 17%.

Polls are suggesting that a Democrat “clean sweep” is possible in the US elections next month. If that happens, fiscal spending will rise significantly. In the podcast I look at Biden’s plans, including his future response to China.

Yesterday the BoE told the market to prepare its systems for negative interest rates. There’s likely more QE on the way too. In today’s episode I also look at the latest from the Fed, and China’s possible entry into the WGBI.

Japan is getting a new Prime Minister later this week. Yoshihide Suga will replace Shinzo Abe. What does that mean for Japan’s low growth, high government debt economy. And is Japanification really a terrible outcome for the west?

Anthropologist David Graeber sadly died last week. One of his most important works is “Debt”, which challenges our idea of money, and calls for widespread debt forgiveness in society. In today’s podcast I look at that book, and also at the reasons behind the fall in the UK’s pound.

Central Bank inflation targets don’t change very often, so it’s a massive deal when the world’s most important CB changes its goals. The Fed will no longer let disinflationary “bygones be bygones”. That means no rate hikes for a very very long time.

This is the first episode of Season 2 of the World of Bonds. In it I examine the yield curve steepening we’ve seen, the relentless grind lower in credit spreads, and the stabilisation of the US dollar.

This is the last episode of Series 1 of Uncle Jim's World of Bonds, although I'll be back over the summer if something interesting happens.  In this longer episode, I look at what bond markets have learnt since lockdown began in March 2020.  And what are the 5 things that I'm going to be reading up about over August?

A gold market special - how does today’s new record high for the “barbarous relic” relate to the world of bonds?

We’ve got the first study on whether negative rates work from a behavioural point of view. Also today, the new Euro Area Recovery Plan, and a look at credit downgrades.

You know we like a bit of economic history here, so here’s some evidence from hundreds of years of pandemics, from the Black Death to the flu of 1957.

We looked at the 6 “myths” around deficits in my last podcast, and the idea that there is no constraint for sovereigns to borrow unlimited amounts in a world of economic slack. Today we look at some of the reviews and criticisms of the book.

A special episode focusing on the economic book of the moment, The Deficit Myth. What are the limits to government borrowing? Are there any? In today’s podcast we look at the 6 myths highlighted in Stephanie Kelton’s book. The strongest message? Don’t think of a government like a household.

Today we look at the UK’s new fiscal stimulus measures, and also about the US “ban” on ESG.

We also look at COVID adjusted inflation rates, and the strongest U.K. money supply growth since Henry VIII.

The jobs rebound in the US has been strong so far. What happens though when furlough schemes start to come to an end later this year?

A super strong Q2 for all asset classes. In today’s podcast I look at this year’s financial markets performance so far, as well as asking whether Boris Johnson has anything in common with FDR.

The Federal Reserve has started to talk about YCC as a possible next monetary policy step for the US. Japan got there first - it’s not actually had to buy many bonds to “pin” yields at zero. Is that a bug or a feature?

Paul Tucker, former BoE Deputy Governor is in the press today worrying that central bank independence is under threat. In today’s podcast we look at his fears, and also analyse the outperformance of ESG investment strategies in the time of COVID. Can we believe the numbers?

Eric Lonergan & Mark Blyth explain how anger put Trump into White House, led to Brexit and the Yellow Vests in France. And then discuss how negative interest rates allow societies to handle the root causes of all this anger and fear.

After Trump’s disastrous Tulsa rally this weekend, it’s time to look at the latest betting odds for November’s election, and also to look at some of the policies that might get enacted in either a Democrat or Republican White House.