The CrossBorder Capital Blog

The Spectre of Bonds?   US 10-year Treasury yields are leading World Government Bond yields higher, with latest data confirming an upward trend break. However, investors should not read too much into this, because bonds have several moving parts and the ‘front end’ of the term structure is currently dominating the more benign message from the ‘back end’. It is the belly of the curve that looks most interesting, since convexity is likely to keep building and mid-duration yields should rise by more.     See our latest published research, Global View - The Spectre of Bonds? - September 2021    

The End of Build, Build, Build …. And the Start of Help, Help, Help?   Evergrande should be read as a sign of change. China is embarking on a new phase of development that emphasises ‘stability’ over economic ‘growth’ and signals the growing ‘financialization’ of her economy. Evergrande is a signal of tighter Chinese policy control over credit. This sea-change has big implications for the World economy, and the future hegemony of US finance and the role of US dollar. It may end up exposing cracks not only in China’s financial system but  in Western finance too. This report warns Western policy-makers not to dismiss the China threat.     See our latest published research, Global View - The End of Build, Build, Build …. And the Start of Help, Help, Help? - September 2021    

Taper Talk and Taper Walk   Latest weekly balance sheet data from major Central Banks show aggregate liquidity growth ticking up to 9% (3m ann.), but still in the narrow 5-10% range established since June. The G4 (ex. China) equivalent is higher at 10.9%. The Fed continues to outpace all other major Central Banks, having switched direction in July while other majors continued to curtail liquidity growth. Despite assurances of continued monetary accommodation in this week’s policy statements from the Bank of Japan and Bank of England, the data show that liquidity growth peaked in late-Spring and has been trending lower since. And the early-September announcement by the ECB of a slower pace of asset purchases looks to have come after the event : ECB liquidity growth slowed dramatically in mid-June and has not recovered.      

Are Central Bankers Focussing on Inflation Rather Than Growth?   Latest weekly balance sheet data from major Central Banks show aggregate liquidity growth has stabilised around 8% (3m ann.), still in the narrow 5-10% range established since June. The G4 (ex. China) equivalent is higher at 10.6%. Beneath the headline value lies a broad range, with the Fed expanding at pace at one end of the spectrum and the People's Bank of China curtailing liquidity growth at the other. The other major Central Banks sit somewhere in between.     See our latest published research, Weekly Global Liquidity Update 17 th September 2021  

Global Liquidity Latest: The Invisible Taper?   ·                 The US Fed, the ECB and the People’s Bank of China are all now tightening, with the ECB seeming to be the most advanced despite the recent fake-pleas from ECB President Lagarde that they are not ‘tapering’   ·                 Likely that upward inflation surprises will be met by a more aggressive Fed stance than is widely expected. This response would reinforce the downward track of Global Liquidity and likely support nominal 10-year Treasury yields in a 1-1½% band         See our latest published research, Global Liquidity Latest – September 2021