Bank of England

Price Discovery - R.I.P.!

But the destruction of price discovery in the sovereign debt market is not simply an academic curiosity to be jawed about by the few remaining fiscal scolds in the world. To the contrary, it is already having massive toxic consequences in the arenas of fiscal governance and capital markets alike.

Frontrunning: July 1

  • Bond yields sink as central banks head for easier policy (Reuters)
  • PM hopeful Gove says UK leader must believe in Brexit (AP)
  • U.K. Can’t Bank on EU’s Rationality in Talks (WSJ)
  • Gove Makes Case for U.K. Premiership After Johnson Betrayal (BBG)
  • ECB not debating abandoning capital key in QE buys (Reuters)

Futures Stumble As Global Bond Yields Drop To All Time Lows, Precious Metals Spike

Whether it is due to the conclusion of quarter-end window dressing, or due to a more poor manufacturing data out of China overnight, but the new quarter is starting off poorly for risk with Europe flat and US equities lower, while the scramble for safety means that bond yields across the developed world just hit new all time lows as precious metals are surging once again on ongoing speculation central banks will do anything to keep markets propped up and buy up even more assets.

If The UK Economy Tanks, Don't Blame Brexit

Last Thursday, the people of Britain voted in a referendum to leave the European Union (EU). Most commentators view Britain’s exit (“Brexit”) from the European Union as bad news for economic growth in the UK and the eurozone. As a result, it is argued, the growth rate in the rest of the world will be also badly affected. It is more likely that, whether the pace of real economic growth over time will weaken or strengthen is going to be set by the pace of expansion in the pool of real wealth.

Global PPT Swings From "Easing Actions Are Backfiring" To Double Central Bank Bazookas In 3 Days

Sunday evening, as the world watched the fallout from what "Remin"-ers said was the end of the world, The BIS warned that central bank 'easing' actions "have started to backfire" and explained what little could be achieved with further stimulus. Three days later, first The Bank of England and then the European Central Bank both unleashed fresh bazookas as The PPT to save the world swung into action to rescue stocks and the all-important global wealth effect. Yet again - no consequences for anything will be allowed...

IMF Warns Brexit "Uncertainty" Means "Even Lower Growth" For UK, EU

“Brexit has created significant uncertainty and we believe this is likely to dampen growth in the near term, particularly in the U.K. but with repercussions also for Europe and the global economy. Prolonged periods of uncertainty and associated declines in consumer and business confidence would mean even lower growth”

Frontrunning: June 30

  • Brexiters at war as Johnson pulls bid to be PM (FT)
  • Soros Says Brexit Has ‘Unleashed’ a Financial-Markets Crisis (BBG)
  • World stocks poised for worst month since January (Reuters)
  • China to tolerate weaker yuan, wary of trade partners' reaction (Reuters)
  • China central bank criticizes media for publishing 'inaccurate information' on yuan rate (Reuters)

Day 3 Of Global Post-Brexit Rally: European Stocks, US Futures At Session Highs

Day three of the post-Brexit rally continues, and after some initial weakness due to concerns about Chinese currency devaluation, both European stock and US equity futures were trading at session highs, facilitated by yesterday's stress test results which saw dozens of US banks unleash a tsunami of stock buyback announcement which in turn pushed S&P futures to new post-Brexit highs.

Brexit, A Step In The Right Direction: The Optimistic View

In the conventional narrative, Brexit is about immigration, escaping the EU's bureaucrats of Brussels, class war or political theater. It may be about all of these, but beneath these surface issues lies a deeper dynamic: a recognition that the entire system is broken and a new arrangement of power, responsibility and risk is required. In this view, Brexit is a positive step in the right direction, away from centralization and central planning and towards decentralized arrangements that enable more dynamic, localized solutions.

Frontrunning: June 29

  • Global stocks gain as Brexit nerves settle (Reuters)
  • Draghi Wishes for a World Order Populists Will Love to Hate (BBG)
  • Merkel Says No Way Back From Brexit as Cameron Regrets Loss (BBG)
  • EU leaders meet without UK to plot Brexit response (FT)
  • Division, confusion as EU rethinks future without Britain (AP)

Kuroda Is Trapped As The BOJ Can't Ease Any Further: Here's Why

While the BOJ is reportedly meeting with the government today, it’s going to be addressing a situation that just got more difficult with a poor menu of policy options. It can purchase more assets and lower interest rates, but it can’t change a world economy that’s running out of inflationary gas.

Satyajit Das: What Does Brexit Really Signify?

History may well record that little changed as a result of Brexit after the long tortured process of negotiation of the terms of withdrawal and arrangements regarding trade and other matters with the EU. But, if the deep seated economic and social divisions within Britain or other societies cannot be dealt with peacefully and through existing processes, the risk is that it will unleash the furies of nationalism and isolationism in unknown ways and with unpredictable results.

 

This Is What Draghi Said To Spark Speculation Of Another Global Central Bank Bailout

The head of the ECB avoided mentioning the U.K.’s vote to leave the European Union but instead called for greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures.  “We can benefit from alignment of policies,” Draghi said at the ECB Forum in Sintra, Portugal. “What I mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all; and a shared commitment to found our domestic policies on that diagnosis."