INTEREST RATES

long-term zero or negative interest rates

Fixed Income: A Search For A Safe Haven Or A Question Of Yields?

J.L.M. Campuzano (Spanish Banking Association) | At the end of the day, we have zero or negative real long-term interest rates. Why? The most simple answer has to do with the relation between supply and demand. And everything leads us to think that there is more demand than supply in the fixed income markets.


monetary normalisation

Preparing For The Start Of Monetary Normalisation In Europe

J.L Campuzano (Spanish Banking Association) | What is clear from ECB President Mario Draghi’s speech last Thursday is that investors consider we are closer than farther away from the start of monetary normalisation against a backdrop of economic optimism.


Secular stagnation

What’s happened to the Secular Stagnation thesis?

As the global outlook improves, many people ask what’s happened to Larry Summer’s hypothesis of Secular Stagnation, which says there are clear signs that the economic world has been “cooling down” for decades. And currently, everything seems to make us think that the recovery we have on our doorstep is not going to be strong or long-lasting.


Return of investors yields

A New Humble World and the Return of Yields for Investors

AXA IM | The past year has witnessed something of a turn-around in investors’ perceptions of the economic and financial outlook, chiefly on the back of hopes that the cloud of secular stagnation may be starting to dissipate. In our 2017 outlook, we take a step back from current market jitters and examine the fundamentals behind the present backdrop of ultra-low interest rates and poor economic growth. Simply we challenge the dominant idea that this is the fate of our future as investors.


BankofEngland

BoJ, ECB and now BoE: anything is possible with economic policy

Fidelity | In line with expectations, the Bank of England’s monetary policy committe voted unanimously to cut interest rates – for the first time since 2009 – by 0.25%. It also  announced a package of additional measures, such as an extension of the current quantative easing programme (including corporate bond purchases) and a new liquidity line (Term Funding Scheme).


ECB's tapering

ECB, Nothing New: Rates at 0%

The European Central Bank kept its interest rates and policy plans unchanged on Thursday and said the immediate stress caused to markets by Britain’s shock vote to leave the European Union had been contained.


uncertainty

The Cost Of Uncertainty

J.L.M. Campuzano (AEB) | Little by little the markets are stabilising. Liquidity is improving and trading volumes are normalising (although they are still low…what is normal?)


Helicopter money: too complex to be deployed any time soon

Citi | ECB Executive Board member Benoit Coeuré gave an interview to Politico on March 23, published on 30 March and featuring on the ECB’s website. Mr. Coeuré begins by explaining that the package announced on March 10 was “very potent, both in intensity and sheer volume”. On the subject of monetary policy tools at the ECB’s disposal, Mr. Coeuré notes that “negative interest rates are not our main instrument, they just support our overall policy. And looking ahead, we’re not short of instruments – our choice is quite large. We will be able to deal with adverse situations if necessary”.


Janet Yellen testimony

A Free Market in Interest Rates

Keith Weiner via TrumanFactor | Unless you’re living under a rock, you know that we have an administered interest rate. This means that the bureaucrats at the Federal Reserve decide what’s good for the little people. Then they impose it on us. In trying to return to freedom, many people wonder why couldn’t we let the market set the interest rate. After all, we don’t have a Corn Control Agency or a Lumber Board (pun intended). So why do we have a Federal Open Market Committee? It’s a very good question.


Spanish banks profitability

It’s Not Draghi’s Fault If Spanish Banks’ Profitability Is Low

Confusing costs with revenues, or assets with liabilities, is lethal if you are analysing the situation of the banks. It now appears that, according to some so-called experts, the ECB and its low interest rate policy is to blame for the weakness and lack of profitability amongst Spanish banks.