Central Banks

Capital Calls: BoE, Soros, Infrastructure, Pay

3 March 2021

Concise views on global finance in the Covid-19 era: The Bank of England starts to embrace the green transition; George Soros has some advice for France; Joe Biden gets a timely reminder of the importance of infrastructure; climate laggards risk getting hit in their wallets.

Chancellor: A bear market in bonds is beckoning

2 March 2021

Bond bull runs tend to last for decades, making it nearly impossible to accurately predict a turning point. But recent fixed-income extremes, together with the complacent attitude of central bankers and investors, suggest history’s greatest bond boom has passed its sell-by date.

Sustainable debt may be too popular for own good

2 March 2021

Investors are piling into bonds sold by companies such as H&M or Tesco which punish issuers for missing environmental targets. Demand has been such that the funding is now dirt-cheap. That could distort the price of the securities, and their intended effect.

The Exchange: The post-pandemic global economy

2 March 2021

Policymakers will face tricky choices about when to withdraw massive policy support as economic recovery kicks in. BNP Paribas’ group chief economist, William De Vijlder, joins Swaha Pattanaik to discuss their options, the focus on inclusive growth and the outlook for inflation.

Central banks will have to fight reflation tantrum

26 February 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.

“Good” rises in bond yields can turn bad

25 February 2021

U.S. borrowing costs are climbing. That’s less of a problem for stock markets when the cause is rosier growth prospects. Jay Powell says he isn’t about to tighten monetary policy, the usual party pooper for equity rallies. But inflation concerns would quickly sour the mood.

Fed musical chairs takes away Wall Street’s seat

22 February 2021

Chair Jay Powell’s views on jobs make it easy for President Biden to rehire him when his term ends. The same isn’t true of the Fed’s top cop, Randal Quarles. His exit would make space for a more progressive candidate, potentially saddling banks with sterner capital requirements.

Jay Powell makes life harder for Christine Lagarde

16 February 2021

Global bond yields are rising, partly because the Fed boss says he wants inflation to run above 2% for a while. That stance will keep short-term interest rates low and the dollar weak. All this is unhelpful for the European Central Bank chief’s fight to support euro zone growth.

BoE preps negative rate gun it doesn’t want to use

4 February 2021

Bank of England boss Andrew Bailey told lenders to be ready to cope with sub-zero interest rates at any point from six months’ time. The weapon will be a handy addition to his arsenal. Covid-19 variants or post-Brexit trade frictions may yet derail the growth rebound he expects.

The Exchange: Too much stimulus stores up big risk

26 January 2021

That’s the view of Oliver Baete, CEO of Allianz. Markets are pricing in vaccination perfection, as they’ve grown dependent on central bank and government largesse, he tells Rob Cox. But for the $97 billion German insurer, there’s still opportunity to be had in the year ahead.

Corona Capital: Indian banks, LBOs, Stellantis

18 January 2021

Concise views on the pandemic’s corporate and financial fallout: Indian banking guru Aditya Puri gives reasons to be bullish about New Delhi’s lenders at a Breakingviews predictions event; the ECB cracks down on risky loans; carmaker Stellantis gets a boost from passive funds.

ECB mantle will cloak Italy’s new political crisis

13 January 2021

The country’s government is collapsing amid internal squabbling. That may complicate tapping some 200 bln euros of EU funds, hurting the recovery, or even lead to messy elections. Central bank boss Christine Lagarde’s monetary bazooka should cushion debt market jitters, for now.

Argentina borrows from the Elliott playbook

8 January 2021

The country used an obscure but widespread legal clause to argue for dismissing part of a lawsuit over GDP-linked warrants. Paul Singer’s fund once helped push Argentina to default with such wordplay. If Buenos Aires' tactics pay off, other creditors will have to pay attention.

Corona Capital: Icahn, Productivity, Natixis

4 January 2021

Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.

Central banks’ debt monsters will need taming

31 December 2020

Authorities fought the pandemic by slashing rates and buying bonds, at the expense of pumping up credit further. In 2021, watchdogs can make amends by limiting banks’ exposure to toppy buyouts and shining a brighter light on private loans. They can also skewer credit ratings.

Latin America debt will hit post-crisis sweet spot

22 December 2020

Corporate defaults in the region have jumped during the pandemic and political concerns persist. But ultra-low global interest rates and expectations that richer countries could spend more on infrastructure will be enough to entice yield-hungry investors to these markets.

Bank buybacks are a Fed gift nobody needs

21 December 2020

The central bank will let lenders resume some stock repurchases, but with limits on how much. It’s no great sacrifice: buybacks are good for earnings per share, but they don’t obviously create value. And it’s not like investors can obviously spend the money better themselves.

Next Hong Kong bourse boss should resist deal urge

21 December 2020

Stock exchanges are buying each other and data giants like $27 bln Refinitiv, activity that tempted outgoing HKEX chief Charles Li. Providing a gateway to China, however, is the company’s special sauce. Capital and attention are best focused on the rising threat from Shanghai.

Review: Money’s history proves credibility is king

18 December 2020

Jacob Goldstein’s book traces currency’s messy journey from Mesopotamian IOUs to bitcoin. He shows it has always been based on shared beliefs and trust, and is closely connected with the development of political freedom. Turns out, curbing power may be key to making money work.

Currency manipulator label is Trump gift to Biden

16 December 2020

The U.S. Treasury says Switzerland and Vietnam are skewing their currencies’ value against the dollar. Technically, it’s right. The president-elect can ignore this mostly symbolic move when he takes power in a month. Then again, some modest trade friction may be useful at home.