After the Conservative party astounded all by sweeping a solid majority in the UK’s election last week, two key issues have surged to the forefront. The Conservative party commitment to hold a referendum on EU membership, and the Scotland question. Both are going to dominate headlines for the foreseeable future. The media is guaranteed to misrepresent both to try to sound dramatic and exciting. Neither issue is likely to result in a significant long-term change to the status quo. Here is why. Continue reading
BIll Gross has a popular chap this week, no sooner had he called the German bund “the short of a lifetime,” than 10 year bunds crashed in price as yields rose from about 5bp to nearly 60bp. Is Bill a genius? Should you listen to him? Or should you never bet against central banks?
It isn’t a stretch to say that Bill Gross is a genius. But, not for his labelling of bunds as a short. In fact, if you listen to the clip where he called the bund a short, he specifically said it was a long term idea, hard to put on now and that he wasn’t calling for the bund to reach 50bps in a week. Continue reading