Tag Archives | interest rates

Budgeting for the Great Unknown in 2018 – 2020

“There isn’t anybody who knows what is going to happen in the next 12 months.  We’ve never been here before.  Things are out of control.  I have never seen a situation like it.“ This comment from former UK Finance Minister, Ken Clarke, aptly summarises the uncertainty facing companies, investors and individuals as we look ahead […]

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Interest rates and London house prices begin return to reality

Global interest rates have fallen dramatically over the past 25 years, as the chart shows for government 10-year bonds:   UK rates peaked at 9% in 1995 and are now down at 1%: US rates peaked at 8% and are now at 2%   German rates peaked at 8% and are now down to 0%: […]

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London housing market hit by Brexit, China’s capital controls

London’s housing market was always going to have a difficult 2017. As I noted 2 years ago, developers were planning 54,000 new luxury homes at prices of £1m+ ($1.25m) in central London, which would mainly start to flood onto the market this year. They weren’t bothered by the fact that only 3900 homes were sold […]

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Monetary policy reaches sell-by date for managing the economy

Monetary policy used to be the main focus for running the economy.  If demand and inflation rose too quickly, then interest rates would be raised to cool things down.  When demand and inflation slowed, interest rates would be reduced to encourage “pent-up demand” to return. After the start of the Financial Crisis, central banks promised […]

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Global auto market heads for 5% fall as stimulus impact wanes

2016 data highlights one startling statistic about the world’s Top 7 auto markets.  They are 85% of total world sales and as the chart shows, their overall sales growth since 2007 has been entirely due to China:    China’s sales have risen nearly four-fold since 2007, from 6.3m to 24.2m    Sales in […]

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Trump and dollar strength will accelerate the Great Reckoning

Corporate debt in the Emerging Markets highlights the impact of the Great Reckoning, with the US dollar and interest rates rising, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Corporate borrowers in Emerging Markets (EMs) are now facing higher debt service and capital repayment costs, due to […]

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Recession the base case scenario for 2017

It is hard to be optimistic about the outlook for 2017. The good news is that policymakers are finally giving up on the idea that stimulus can somehow return us to the growth levels seen when the Baby Boomers were young.  As the Bank of England note in a new Report:   “Economic theory suggests that a […]

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Chart of the Year: US$, 10-year US interest rates begin to rise

Last year it was the oil price fall.  This year, there is no doubt that the US dollar has taken centre stage, alongside the major rise underway in benchmark 10-year interest rates.  As 2016’s Chart of the Year shows:   The US$ Index (black) has risen 12% since May against other major currencies (euro, yen, […]

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2016’s Word of the Year: “Impossible”

Nobody likes change, particularly on the scale that is taking place all around us today.  Understandably, we prefer to live in a state of Denial.  This is why “Impossible” is my Word of the Year for 2016. The main feature of the word is that it is a statement, and a very clear statement.  People […]

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Interest rate and US$ surge mark start of the Great Reckoning

The bond market vigilantes are back.  And they clearly don’t like what they are seeing.  That is the clear message from the charts above, showing movements in 10 year government bond interest rates for the major economies, plus their exchange rate against the US$ and the value of the US$ Index:   As I warned […]

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