Uncle Jim’s World of Bonds

Love from Jim x

A look at Biden's awful first Presidential debate with Trump, and his 20% fall in betting markets overnight.

And Australia may be out of the cricket (just enjoying typing that) but its inflation numbers sent bond markets lower yesterday.

And a look at Noah Smith's views on ‘elite overproduction'.

The ‘boiling frog' impact of higher rates on credit is starting to be felt, but no big default rise until 2025.

And China leaves rates on hold, despite weak house price news.

But French assets are really struggling, and credit is starting to weaken.

Also: a smorgasbord of other bond market ephemera.

US rate cut now not fully priced until December.

Could mean less demand for traditional EZ sovereign debt, especially as France risks a downgrade from S&P.

Also: credit spreads are tight and stable. It was quiet - too quiet…. And CMBS takes its first big hit since the GFC.

And it's not just because of July's General Election - service sector inflation is too strong.

Does that mean global growth is reaccelerating?

And Biden puts 100% tariffs on Chinese EVs.

Aggregate US stats are now disappointing- although the rest of the world is doing OK.

Also: Swedish rate cut, and no more excess savings left in America.

2 year US Treasury bond yields drop from 5% to 4.75% in 2 days.

And H5N1 (Bird Flu) starts to get attention in financial markets. Gulp.

Also: yen intervention at last? And US immigration at 3 million per year.

And Japanese inflation goes the other way, with a downside shock.

Ben Bernanke v the Bank of England.

And: Skyscraper - I Love You.

And RIP behavioural economist Daniel Kahneman.

Looser Fed, so Barclays says ‘buy TIPS'.

And I take a look at Monetary Policy Rules like the Taylor Rule (Spoiler Alert: the Fed should cut now).

Also: CPI index rebalancing, corporate default rates, and the extreme injustice of the Nottingham Forest points deduction.

The BoJ is expected to hike for the first time since 2007 later this week. And the Fed might signal a higher r* via the ‘dot plot' at this week's FOMC.

And in credit-land, the NIP (New Issue Premium) has turned negative!

The latest US jobs numbers reinforced the market's view that the economy is resilient, but not re-accelerating.

What does the Budget mean for gilts? And how does ‘tipflation' get measured in the CPI?

And a load of economic ephemera to keep you entertained. Includes a disconnect in the textbooks as to the causes of the Great Depression.

And the cost of getting your kids driving a car. A drag on economic growth?

The AI boom could raise the world's cost of capital.

And some economics related pop and rock songs. More needed please!

And the Nikkei approaches its 1989 all time time, having fallen by 81% in the meantime.

And more motorway related urban myths.

And US employment is still on

What's the best New York song by the way? The LCD Soundsystem one? Velvet Underground's Waiting For My Man? Fairytale of NY? Empire State of Mind? Don't say Frank Sinatra.

Also: a shock for the UK economy with a collapse in retail sales.

Growth is strong, inflation is back towards target, jobs are plentiful.

Lowest 2 year yields since May 2023, despite a stronger than expected CPI print.

Huge supply wave in January.

Election year - definitely. Soft landing year - maybe.

Man I go on a bit. The stuff about The Pogues is at 38 minutes if you can't face the rest.

In which Uncle Jim talks you through his brother-in-law's Spotify Unwrapped.

And Eurozone inflation falls by more than expected.

Also Noah Smith on productivity

Gilts underperformed significantly last week on higher borrowing expectations. Don't worry though - it wasn't as bad as the Trussonomics sell-off.

US CPI for a October came in flat, leading to a big move lower in global bond yields.

We also have Moody's looking at Italy's credit rating this week, with the risk of a downgrade to junk.

Also today - why you shouldn't necessarily believe in really old people.