The bizarre world of negative interest rates
Some central banks are pushing monetary policy into the upside down world of negative interest rates, but rather than success they are creating bizarre side effects.
Mrs. Watanabe meets European insurance companies
Since the early 2000’s the name ‘Mrs. Watanabe’ has been used to describe yield seeking Japanese retail investors, who were forced to increase their offshore investment risk taking in response to ultra-low interest rates back home.
Compensation for credit risk is poor
Following the sharp sell-off in Q4 2018, credit markets globally have performed strongly in 2019. Having seen a big dip, followed by a quick rebound, how are we now left?
Hidden liquidity risk in fixed income portfolios
Liquidity is one of those things that doesn’t get much focus until it’s too late.
5 Key Risks Impacting Fixed Income for FY20
In this article, we will discuss five key risks to fixed income markets for FY20 and explain their relevance to those allocating to fixed income investments.
Stellar bond returns … what’s driving them?
2019 has so far been a stellar year for bond returns globally. Even a simple passive exposure to long dated bonds has delivered handsome profits that far exceed the average yield of those bonds.
Negative interest rates … the abnormal becomes ‘normal’
Hedonic adaptation is a psychology term that describes the human tendency of reverting to a relatively stable or ‘normal’ state following either positive or negative life changes.
Central banks decide to keep the bar tab open
And it’s what’s driving the disconnect between bond and equity performance in 2019.
Yes inflation is low, but that’s already heavily priced in
Recent inflation readings in Australia and the US have reinforced the strong consensus view that inflation will remain very low for a long time.
Strange behaviour in option markets
Finance text books, reams of academic research and practitioner experience all point to the existence of a “volatility risk premium” (VRP), which is a foundational principal of option selling strategies.