Government bonds

Strategy

Off the record, on the QT, and very hush-hush

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'?

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Economics

Car-ry on spending?

Just like cars, it costs more to maintain an older person than a younger one. Government borrowing could rise by 3% of GDP over the next 20 years as a result of ageing. To offset this, the UK government has squeezed the rest of the public sector in an attempt to balance the books. This seems politically unsustainable. Is the government about to reverse course by ending public sector pay caps?

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Strategy

Sympathy for the lonely rider

Our ‘lower-for-longer theme’ remains firmly in place. We believe it’s unlikely the world will return to historically normal interest rates. In today's markets, therefore, owning diversification and protection becomes ever more important.

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Macrobites

If at first you don't secede...

The Scottish independence referendum in September 2014 was billed as a “once in a generation” event. Two and half years later, and we are now faced with a possible second vote. The politics of the case for independence may have been shaken up by the UK’s decision to leave the European Union, but the economics have also been shaken up by the collapse in oil prices.

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Economics

So what exactly is ‘helicopter money’?

Over the past few weeks we have frequently debated the likelihood of 'helicopter money'. However, I have noticed that people tend to use the term to mean many different things. What some people call a helicopter, other people would hardly call a drone. In light of this I think it might be helpful to answer the question: what does helicopter money really mean?

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Economics

The ECB's Groundhog Day

Until the European Central Bank (ECB) changes the rules associated with sovereign bond purchases, the duration of its holdings will steadily increase. This introduces a self-reinforcing dynamic. When yields drop, the ECB is forced to buy more, putting further downward pressure on yields.

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Economics

Running out of things to buy

The European Central Bank (ECB) is facing a conundrum of its own making. Boxed in by a series of constraints on its asset purchase programme, the Governing Council needs to change the rules to continue its bond buying spree. There are not many good options available at this stage.

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