Posts tagged 'Gilts'

No more nitroglycerine

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Apr 22 12:56 | Comment |

Compare:

…the UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors. In addition, its interest rates are already artificially influenced by accounting standards that at one point last year produced long-term real interest rates of 1/2 % and lower. Read more

Who ate all the gilts? Was it you, SNB?

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Oct 31 2012 14:28 | Comment |

An interesting nugget from Nomura’s Geoffrey Kendrick on the Swiss National Bank data released earlier, as it pertains specifically to sterling:

On GBP specifically we estimate that SNB buying accounted for two-thirds of all non-resident buying of gilts in Q3.

 Read more

‘Two plus two equals four, even at the Bank of England’

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Oct 29 2012 14:42 | Comment |

Credit Suisse’s answer last week to the (rather odd) idea of the British government “cancelling” (restructuring) the gilts held by its central bank under quantitative easing…

From the bank’s credit analyst William Porter, it’s worth a read:

Any financial problem can be solved at a stroke if double-entry book-keeping can be ignored as a constraint. The problem is, it cannot. So debate in the private-sector financial community about “solutions” to the UK’s financial challenges based on ignoring it worry us. In the UK, Mervyn King has been quick to debunk the fallacies. But if they can exist even for a while in the very simple UK, then the infinitely more complex euro area (which we do not address in detail here) is fertile ground for solutions based on fallacious reasoning…

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RIP (old) RPI and hello a happier Chancellor

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Sep 18 2012 16:53 | Comment |

The Office for National Statistics is out to get the Retail Price Index… or at least the part of responsible for the ‘formula effect gap’. But before we get to the sexy stuff — involving gilts and clauses and all — a quick statistical primer is called for.

The RPI began life as a compensation index, developed as an aid to protect ordinary British workers from price increases associated with WWI. It didn’t become the main domestic measure of inflation until much later. Read more

There is a disturbance in the UK funding curve

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jul 26 2012 17:32 | Comment |

FT Alphaville has already referred to the weird phenomenon of unsecured funds trading through secured funds in the UK this week, as reported by ICAP.

By definition, secured borrowing should be cheaper than than unsecured. Read more

And now for something special in the gilt market

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jul 24 2012 15:59 | Comment |

A little update on what short-term rates are pricing in when it comes to BoE meetings this fall courtesy of ICAP’s Nick Middleton.

As he observes, something of a 25 bps cut definitely being eyed to some degree: Read more

Accruing an old lady

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Jul 12 2012 16:50 | Comment |

The UK’s Office for Budget Responsibility is in desperate need of a graphic designer…

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UBS tackles the negative yield puzzle

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jul 06 2012 16:14 | Comment |

Low yields in the context of epic supply may baffle some people, but not UBS’s Chris Lupoli.

Lupoli, part of Global Macro Team, seems, if anything, to subscribe to our negative carry shift theory — the idea that a more permanent curve transformation may be under way. Read more

Britain, still doomed

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jun 22 2012 11:55 | Comment |

We promised you the second part of Hinde Capital’s “Britain is doomed” analysis…

… so here are some choice extracts from the report (which is now up in its entirety on their website): Read more

The Osborne bond, the official request

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Mar 21 2012 14:52 | Comment |

From the UK Debt Management Office’s issuance plans for the 2012-13 fiscal year, released as part of the UK Budget documents…

In light of evidence of strong demand for gilts of long maturities and against the backdrop of historically low long-term interest rates, in 2012–13 the DMO will consult on the case for issuance of gilts with maturities significantly longer than those currently in issue, that is in excess of 50 years, and/or perpetual gilts. The consultation will build an evidence base to inform the Government’s decision on whether to issue such instruments. It will seek to establish the likely strength and sustainability of demand, the cost-effectiveness and risks of issuance, and the impact on market liquidity and the good functioning of the wider gilt market. Read more

100-year gilts and the madness of (crowds of) actuaries

| Mar 17 2012 11:08 | Comment |

Time like an ever-rolling stream

Bears all its bonds away Read more

No forever debt please, we’re British

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Mar 14 2012 18:45 | Comment |

We couldn’t not post the thoughts of Julian Wiseman, Societe Generale rate strategist, concerning HM Treasury’s trial balloon of a possible 100-year UK government bond.

Wiseman did after all think of it first. Read more

A century of gilt

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Mar 14 2012 08:35 | Comment |

Or, taking consols, the War Loan, and all that UK sovereign debt jazz into the 21st century.

The latest from the Chancellor of the Exchequer ahead of the UK’s March 21 Budget, according to Wednesday’s FT (and leaving SocGen’s Julian Wiseman prescient): Read more

Is QE working?, asks the Bank of England

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Feb 15 2012 11:03 | Comment |

Linda Yueh of Bloomberg TV just asked a very sharp question of Bank of England governor Mervyn King at Wednesday’s Inflation Report press conference, at pixel time. If the UK’s money supply is contracting, shouldn’t there be more QE, and are you buying the right assets (gilts) anyway?

Mervyn dodged the last part. (Update — see below) Read more

Breaking the Bank (in gilts)

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Feb 02 2012 16:38 | Comment |

This’ll be a controversial argument about the Bank of England’s buying of UK government debt, we know… but it comes from Philip Rush of Nomura:

Aggressive quantitative easing brings [gilt] market capacity constraints into play. A renewed intensification of the sovereign debt crisis could cause this should one of QE’s reverse auctions fail. Tweaking maturity buckets or adding linkers could cure the constraints… Read more

Looking at UK repo trends

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jan 31 2012 15:13 | Comment |

We’ve already brought you one collateral crunchy statistic from the Bank of England’s latest monetary and finanical statistics. But here’s another interesting trend from the Bank’s gilt repo and stock lending numbers.

We should note that we have no idea how meaningful this is, but the trend is interesting nonetheless. Read more

On redeeming the war loan

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jan 13 2012 09:57 | Comment |

From the minutes of the UK’s Debt Management Office consultation with Gilt-edged Market makers and investors held on January 12:

There were also a number of calls for clarification around the prospects for the redemption of 3½% War Loan, although mixed views were expressed on whether there was a case for calling it. It was noted that any such decision would be taken in the context of the Government’s debt management objective and that if any decision was made to redeem 3½% War Loan, that decision would be announced via the usual channels to all market participants at the same time. Read more

Gilts draw record numbers of foreign investors

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jan 05 2012 05:07 | Comment |

International investors bought £28.87bn of gilts in October and November – the biggest amount over a two-month period since the data were first collected by the Bank in 1982, the FT reports, helping the government’s long-term benchmark borrowing costs have fallen to lows last seen in the 1890s. Ten-year yields fell to 1.96 per cent last week. They closed at 2.05 per cent on Wednesday. Demand has been supported by the Bank’s decision in October to pump £75bn into the economy – through gilt purchases – in its second QE programme. Read more

Keep calm and call the War Loan

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Jan 03 2012 13:20 | Comment |

(Alternative title: Financial repression meets the History Channel?)

Telling the UK government to issue 100-year bonds clearly wasn’t out-of-the-box enough for Societe Generale’s rates strategist Julian Wiseman. Read more

François Baroin, Christian Noyer, François Fillon are you watching?

| Dec 23 2011 11:14 | Comment |

RTRS-UK TEN-YEAR GILT YIELD FALLS BELOW 2 PERCENT FOR FIRST TIME EVER

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State Street quits UK and German bond markets

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Dec 15 2011 04:09 | Comment |

State Street, the large US custodian bank, has cited new regulations including the “Volcker rule” for its decision to quit the UK and German government bond markets just three months after becoming an official dealer, says the FT. The Volcker rule bans US banks from proprietary trading – buying and selling for their own account. It contains an exemption for US Treasury securities but not foreign sovereign debt. Although market-making – buying and selling on behalf of clients – is permitted under the rule, bankers say worries that that activity will be deemed “prop” will hamper liquidity. State Street’s withdrawal is one of the first concrete signs that banks are preparing to walk away from European market-making businesses because of the new regulatory environment.

  Read more

Any port in a storm – UK gilt edition

| Nov 29 2011 15:44 | Comment |

After a splurge in September, overseas investors scooped up a more gilts in October, according to figures released by the Bank of England on Tuesday.

 Read more

Do you believe in Merkels?

| Nov 25 2011 19:55 | Comment |

At first sight, this looks mad. Lending to the UK government, in charge of the clapped-out British economy, now returns less than lending to Europe’s most successful country.  Worse still, the yields on gilts are measured in sterling, a chronically weak currency, so not only does your money earn less, you’ll be repaid in something which history says will have been devalued by the time you get it back. Oh, and by the way, inflation is 3 per cent above the yield, making the internal devaluation painful, too.

Something is seriously awry here, and two events this week offer clues to why German government 10-year paper yields more than the equivalent UK stock. On Wednesday the markets were spooked by the failure of an auction of 10-year German debt. Those in this arcane world struggled to understand what it meant, so there’s little hope for the rest of us. It’s either bad news, or very bad news, probably depending on whether you’re short of German bonds. Read more

How I learned to stop worrying and love the UK and gilts

| Nov 17 2011 08:55 | Comment |

As a concept, the UK as a haven takes some getting your head around.

Fortunately, Andrew Roberts, head of European rates strategy at RBS, is on hand to help understand why the UK and in particular its gilt market, where yields are close to historic lows (see below), really is a good place to warehouse cash. Read more

(Mis)pricing the UK

| Oct 26 2011 10:51 | Comment |

Has the bond market got it right when it comes to the UK?

On Tuesday, Lex investigated why the UK can raise debt at substantially cheaper levels than its eurozone counterparts, in particular France. Read more

Building a better bank recap, discount curve edition

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Oct 26 2011 09:50 | Comment |

At some point on Wednesday, eurozone governments will say they want banks to find an unspecified amount capital, based on revised sovereign haircuts which… we still don’t know a lot about.

We know that sovereign bond positions will be marked down, or up, according to market values. (When the values will be taken, we don’t know either. Imagine marking five-year Italian debt at dates before and after this summer’s ECB intervention, for example.) We know at the very least that this all fits into a 9 per cent core tier one capital ratio target. Read more

Four months of UK QE

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Oct 06 2011 12:25 | Comment |

But not for Christmas! From the Asset Purchase Facility’s market notice for the BoE’s £75bn of further quantitative easing:

Asset Purchase Facility: Gilt Purchases Read more

Why is Britain still AAA?

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Sep 08 2011 10:44 | Comment |

Viewers of European CNBC early on Thursday morning will probably have seen Danske Bank making their case for cutting the UK’s credit rating by no fewer than four notches, from AAA to A+.

(Which is about where Italy is at the moment.) Read more

From 1896 to 2011, in UK borrowing costs [updated]

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Aug 18 2011 08:53 | Comment |

The 10-year gilt yield fell under 2.4 per cent early on Thursday:

 Read more

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