Argentina debt flashback includes glimmer of hope 29 Aug 2019 President Mauricio Macri wants to restructure the country’s borrowings as his four-year effort to restore its economy and market standing nears an end. History warns against optimism, but the move could give his likely successor some breathing room – if he doesn’t squander it.
Trailblazing German bond sale has hidden message 21 Aug 2019 The government of Europe’s biggest economy managed to sell 30-year debt at a negative yield for the first time. Expectations of imminent monetary easing created some demand. However, details of the auction reveal a shortage of investors buying into the fixed-income mania.
Gold would shine brighter in thick of currency war 21 Aug 2019 Trade and geopolitical tensions have heightened demand for safe havens, but with policymakers trying to keep currencies down, the dollar, yen and Swiss franc offer only partial protection. The yellow metal is different. No one will push back if its price keeps rising.
Brexit pulls Ireland out of ECB force field 30 Jul 2019 Yields on Irish bonds have been rising even as they fall across the euro zone. Fear of a chaotic UK exit from the EU outweighs hope of European Central Bank easing. Dublin lacks its own currency or control of monetary policy. Public spending will have to cushion any shocks.
U.S. bond vigilantes morph into deficit patsies 23 Jul 2019 Treasury prices didn’t budge after lawmakers struck a spending deal, even though it promises years of trillion-dollar deficits. Investors used to target congressional profligacy. But a world awash in money has co-opted them. Now they won’t enforce discipline until it’s too late.
Bond markets keep raising bar for central bankers 4 Jul 2019 Global yields are falling with benchmark German ones at record lows. Investors expect more monetary policy easing on both sides of the Atlantic. That will come but the scale and speed of market moves mean rate-setters will have to work hard to meet ever-rising expectations.
Buybacks prolong Wall Street rally nobody loves 20 Jun 2019 U.S. stocks are near record highs – thanks in part to purchases by their issuers. Investors are pulling out of equities and fund managers report extreme bearishness amidst a weakening global economy. Hopes of Fed rate cuts are a fragile support when it’s the only game in town.
Italian mini-bond plan speeds Brussels showdown 10 Jun 2019 Leaders of the ruling coalition favour using small public bonds to clear a 53 bln euro state debt backlog. Creditors deserve to be paid. But issuing alternative debt – or turning the bonds into a parallel currency – will only accelerate a confrontation with the European Union.
South Africa’s central bank debate goes off-piste 5 Jun 2019 A shrinking economy is prodding the ruling ANC to talk of “quantity easing” and changing the respected central bank’s remit. The constitution protects monetary policymakers’ independence and inflation mandate. But the growing confidence of would-be money printers is worrying.
Hadas: Shaky assumption underpins debt demand 5 Jun 2019 Investors are rushing into high-grade bonds even though long-term yields are falling. Real returns will be acceptable if disinflation persists. But that’s a big if. More active use of fiscal policy or worsening trade frictions could reverse a trend that’s lasted nearly 40 years.
Sticks will help Africa debt more than carrots 5 Jun 2019 One idea to curb binge borrowing is to offer UK legal protection to creditors only if financing terms are publicly disclosed. London may lose business but those who go elsewhere will look shifty and end up paying higher rates. The proposal is better than more debt forgiveness.
Beijing needs to pick a bank bailout message 5 Jun 2019 Regulators downplayed their decision to take over troubled Baoshang Bank, just as another small lender with over $100 bln in assets said auditor EY quit. Officials can rescue banks, or not, but history shows they need to be clear about their reasoning when markets are anxious.
India can’t afford to copy China on growth stats 31 May 2019 New Delhi's frequent revisions of GDP data are less egregious than Beijing’s habit of forcing officials to hit targets, and experts have other ways to measure economic health. But fears of manipulation are embarrassing, and potentially more damaging for capital-scarce India.
China loses leverage in battle against debt 6 May 2019 Hours after Donald Trump threatened to raise tariffs on Chinese goods, the central bank made another $40 bln available for small mainland firms to borrow. Prior easing moves helped stocks and housing more than the productive economy. This delicate balancing act looks wobbly.
Belt and Road repairs fix only some potholes 25 Apr 2019 Beijing's gathering this week to promote its $1 trln-plus foreign policy push comes after a year of unprecedented troubles, from Pakistan to Malaysia. Under pressure, China has shown some welcome flexibility. But U.S. hostility is ramping up too; that’s far harder to pave over.
India’s RBI lost a bad debt battle, not the war 3 Apr 2019 A central bank order forcing defaulting firms into bankruptcy has been quashed by the country's top court. Some lenders will go back to delaying resolution. Yet the judiciary has mostly upheld the newish bankruptcy code: the regulator can still turn the screws on Indian tycoons.
Citi’s Northern Rock wager has political spice 2 Apr 2019 The U.S. bank bought 5 bln pounds of mortgages made by the lender which failed in 2008 from the UK government. The state cuts its debt load, and the buyer gets stable high-yielding assets. The risk is that a left-wing executive takes power, and forces lenders to cut rates.
Review: The People’s Republic turns left 15 Feb 2019 China’s slowing growth has rattled markets around the globe. In “The State Strikes Back”, Nicholas Lardy argues it’s because Beijing has strayed from the path of reform. His persuasive analysis raises fundamental questions about the relationship between politics and the economy.
Breakdown: How to fix Venezuela 4 Feb 2019 The oil-rich Latin American country resembles a failed state. It may need $80 billion in loans and investment if embattled President Maduro departs. At 2013 pumping levels and $50 a barrel, that’s two years’ output for state oil firm PDVSA. A U.S. invasion would be a mistake.
Xinjiang is an extreme case of China’s growth woes 30 Jan 2019 Beijing is trying to de-radicalise its Uighur minority in giant camps. Officials call them vocational training centres, but mass detentions are not helping investment or jobs. As provinces cut 2019 targets, the region is becoming an acute example of widespread capital retreat.