Bond rally musings

It all seemed to make a lot of sense to the media commentators this past week: government bonds rallied and equity markets fell because investors no longer expect a return of meaningful global economic growth during 2019, and in the UK the probability of a hard Brexit has supposedly surged because The Brexit Party won the most votes in the UK’s European elections. Taking a step back, both conclusions
seem a little premature.


The future of Modi’s India

The largest democratic exercise ever attempted has now been completed. India’s election took over a month and saw more than 600 million people cast their votes. In the end, the results were emphatic. Narendra Modi – leading the Hindu nationalist Bharatiya Janata Party – scored a landslide victory to secure his second term as Prime Minister. The BJP alone won 303 of the Lok Sabha’s (the lower house of India’s Parliament) 545 seats, while the right-wing alliance led by the BJP won 353.


Is Baoshang bank China’s ‘Northern Rock’?

For the first time in 18 years, the Chinese government has publicly taken over one of the country’s banks. Last Friday, the China Banking and Insurance Regulatory Commission (CBIRC) announced it would take over Baoshang bank, a small city commercial bank in Inner Mongolia, for one year due to its “serious credit risk”.


Brexit or UK pension funds to blame for rising UK inflation expectations?

Implied market expectations for long-term global inflation have been on a marked downtrend in recent months. These expectations are now close to their historic lows of the global economic slowdown of 2016. Back then, in the US, the expected average consumer price inflation (CPI) rate from five years forward (i.e. the yearly average inflation beyond 2021) dropped to as low as 1.9%. The Eurozone equivalent was 1.3%. In the UK, it was 2.3%.


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