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What Drives 5y5y Breakevens?

While I have previously emphasised the view that the ECB has a sophisticated understanding of inflation markets, and in any event does not rely just on market-based measures of inflation expectations as an input into its monetary policy decisions, 5y5y breakevens have received increased focus from market participants since President Draghi’s mention of the forward breakeven in his speech at Jackson Hole. 598 more words

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The dance goes on: markets rise, whilst fortunes continue to diverge.

Takeways: US and European markets are dancing around record highs. Only one appears to be driven by economic fundamentals, but it would be misleading to suggest the US rally comes without disquiet or that Eurozone markets are all about Mario. 1,250 more words

Deals & Financing

Bloomberg repeats the bond yield fallacy (Milton Friedman is spinning in his grave)

This is from Bloomberg:

“A series of unprecedented stimulus measures by the ECB to stave off deflation in the 18-nation currency bloc have sent bond yields to record lows and pushed stock valuations higher.

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Euro Crisis

Google's Very Bad Week: Europe Attacks and Glass Disappears

This was a particularly bad week for Google. First came the news that the EU is planning (a non-binding) vote that Google should be split up, demanding that the company spin out its search business (which has 90% of the market in Europe versus about 70% in the U.S.). 1,269 more words

Society

Bonds Continue their Levitation Act Despite Rising Stock Market

As to be expected in a holiday market, overnight trading was light. Stocks reacted to positive German unemployment data and rallied slightly. US Treasury bonds continue to rally against the backdrop of rising stock prices  160 more words

Stock Market

Cricket mourning tragic passing of talented Hughes

Today the world of cricket received the news they feared most. Philip Hughes, aged 25, had lost his battle for life just two days after being placed in intensive care playing in the sport he loved most. 771 more words

Sport

Mario Draghi and the ECB go through the looking glass

Yesterday I examined the fiscal plans of European Commission President Jean-Claude Juncker via the lens of Lewis Carroll’s writings.This morning European Central Bank President Mario Draghi has given a speech to the Finnish parliament and I intend to take the opportunity to put the policy of the ECB under the microscope. 1,493 more words

General Economics