Fixed Income Strategist
Chris has quietly slipped into premature middle age - when not strategising about bonds, he has an enthusiasm for running, golf and (inexplicably) gardening. He has just finished his first marathon: a 26.2-mile triumph of determination over common sense.
By Christopher Jeffery - July 16, 2018 3 mins
Is there an Archimedes principle at play in financial markets? As central banks withdraw liquidity by shrinking their asset holdings, does it inevitably imply bad news for investors? We look to theoretical, historical and contemporary clues to find out.
By Christopher Jeffery - June 28, 2018 3 mins
The Hong Kong dollar is tied closely to the US dollar. Monetary policy made in Washington therefore applies directly in Wan Chai and Kowloon. In recent months, the Hong Kong Monetary Authority has been obliged to shrink its balance sheet rapidly to maintain the fixed exchange rate. This serves as a real-life policy experiment of the effects of quantitative tightening in a financial system. So far, nothing has blown up, but Hong Kong equities have been under pressure as financial conditions have tightened.
By Christopher Jeffery - June 01, 2018 5 mins
Political risk is back with a vengeance in Italy. As the third largest global issuer of government bonds after the US and Japan, the country is too big to be allowed to fail without severe contagion to the global financial system. However, it is also too big to bail out comfortably using tried and tested mechanisms.
By Christopher Jeffery - April 10, 2018 3 mins
The US yield curve has consistently flattened since the Federal Reserve began tightening monetary policy several years ago. History strongly suggests that this is an entirely normal market reaction to a rate hiking cycle. If short-term interest rates continue to rise at the pace we expect, we could well be looking at an inverted curve by the middle of 2019.
By Christopher Jeffery - February 12, 2018 5 mins
The Bank of Japan is trying to convince the market that there is “nothing to see here” despite a sharp drop in its asset purchase flow from ¥80 trillion to ¥60 trillion per annum. Add this to the list of reasons to worry about potential yen appreciation, but don’t think of it as a leading concern for global rates or risk assets.
By Christopher Jeffery - January 18, 2018 4 mins
It turns out, quite a lot. The ability of real assets to retain their inflation-adjusted value over time is hugely valuable. Relatively small differentials in annual returns can compound up into huge differences in outcomes over long periods of time. However, knowing whether an asset is in a bubble comes down to a debate about appropriate discount rates.
By Christopher Jeffery - November 29, 2017 5 mins
In pricing fixed income securities, a lot hangs on the difference between the mean, median and mode. Markets reflect a probability-weighted average of potential outcomes (i.e. the mean); policymakers typically focus on the single most-likely outcome (i.e. the mode). Thinking carefully about the difference has important implications for how we view interest rate risks.