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 - 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.
By Christopher Jeffery - October 05, 2017 4 mins
Quantitative easing is a bit of a puzzle. It doesn't work in theory, but appears to have worked well in practice. Should we be worried as that process now edges into reverse with the advent of 'quantitative tightening'?
By Christopher Jeffery - September 12, 2017 7 mins
With the country saddled with high debt and unstable politics, Italian debt markets have persistently underperformed European averages for the last couple of years. This pessimistic narrative is definitely seductive but we believe it is dangerous to get sucked into an excessively negative outlook. The debt problems are chronic rather than acute, the politics are not obviously more unstable than usual, the ECB is being flexible with asset purchases, and the return potential could be greater than it first appears.
By Christopher Jeffery - August 08, 2017 5 mins
The filibuster is an important procedural device in the US Senate that makes it significantly harder to break the gridlock between Republicans and Democrats. President Trump argues that the "very outdated filibuster must go". But what is it? Why is it important? And what are the investment implications of throwing it on the Congressional scrapheap?
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