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One of the main topics in the investment grade (IG) corporate bond space over the past weeks has been frantic primary market activity. Every single day, with very few exceptions, there has been a relentless flood of new corporate bond issues. Year-to-date supply has risen to around $970 billion and c. €310 billion in U.S. and European IG primary markets, respectively, thus exceeding by far new issue volumes over the same period in prior years.

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M&G’s Jim Leaviss interviews Dr Pippa Malmgren author of 'Signals: How everyday signs can help us navigate the world’s turbulent economy'.Data by its very nature is backward looking. To invest successfully, we need to look at the signals all around us, says Dr Malmgren. A cereal packet may be the same size, but the amount of cereal it contains has fallen: we can term this ‘shrinkflation’. There are signals like this everywhere. The social contract between the state and its citizens is based on paying taxes and obeying the law in return for services such as free school and healthcare provision. Austerity measures are a form of default on this social contract, and explain the rise of far right and left parties in many countries today. On a more positive note, Dr Malmgren believes that the future is always investible, and small companies in particular are likely to be at the forefront of innovation. Her tip? Stop reading the Economist, and pick up a copy of Wired!Visit Bond...

M&G’s Jim Leaviss interviews Adair Turner, author of Between debt and the devil.Adair Turner argues that while we need debt contracts in the economy, we must question whether limitlessly more debt is a good idea. He argues that there is a level of leverage (primarily on private rather than public debt) beyond which we create instability and crisis. What’s more, as we have experienced in recent years, it is very difficult to recover in the aftermath of such a crisis. Today, there is so much debt in the world that it is hard to see how economies can ever earn their way out.What of possible bold solutions, such as major debt write-offs, or so-called helicopter money? Turner argues that the primary challenge here is political, but that if we could place responsibility for money printing within an independent central bank, then this could prove an effective solution.Visit Bond Vigilantes: https://www.bondvigilantes.com/?utm_s...

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Financial markets are generally considered to be efficient, particularly in the long run. However, in the short term inefficiencies might emerge, especially in times of severe market stress conditions such as the one we are currently experiencing. This can give active investors an opportunity to take advantage of these dislocations until the market corrects itself.

Today amongst various dislocations observable in financial markets, one which is worth highlighting is the so called “CDS basis”. The CDS basis is simply the difference between the spread an investor receives when owning a physical corporate bond, and the Credit Default Swap (CDS) of the same bond. In relatively stable market conditions, the CDS instrument and the spread received by investors should be very similar as they both reflect market perception of the credit risk. However sometimes they can differ and this generates the CDS basis. The basis is defined as negative when the CDS trades tighter than...

Sri Lanka, Pakistan and Mongolia have each been severely impacted by COVID-19, albeit in different ways. These frontier economies each straddle two worlds. They’re emerging markets in the sense they’ve had access to global debt markets, with their eurobonds included in JP Morgan’s emerging market bond index. But their credit ratings are far below those of investment grade sovereigns, such as Indonesia, who have already been able to issue eurobonds during the crisis. They also still attract significant official sector support as they still have sizeable development challenges. As recent recipients of concessional support from the multilaterals, they were deemed eligible?among 70 other countries? for the G20’s debt suspension initiative.

Sri Lanka, Pakistan and Mongolia have each been severely impacted by COVID-19, albeit in different ways. These frontier economies each straddle two worlds. They’re emerging markets in the sense they’ve had access to global debt markets, with their eurobonds included in JP Morgan’s emerging market bond index. But their credit ratings are far below those of investment grade sovereigns, such as Indonesia, who have already been able to issue eurobonds during the crisis. They also still attract significant official sector support as they still have sizeable development challenges. As recent recipients of concessional support from the multilaterals, they were deemed eligible?among 70 other countries? for the G20’s debt suspension initiative.

One of the main topics in the investment grade (IG) corporate bond space over the past weeks has been frantic primary market activity. Every single day, with very few exceptions, there has been a relentless flood of new corporate bond issues. Year-to-date supply has risen to around $970 billion and c. €310 billion in U.S. and European IG primary markets, respectively, thus exceeding by far new issue volumes over the same period in prior years.

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me. Every platform loses money. Restaurants feel like they're getting screwed. Delivery drivers are poster children for gig economy problems. Customers get annoyed about delivery fees.

Isn't business supposed to solve problems?

Last week's Uber-Grubhub news set off some antitrust alarms for me and got me thinking about the business of food delivery as a whole. But let me start this newsletter with a story about Pizza Arbitrage.

M&G’s Jim Leaviss interviews Diane Coyle, author of GDP A Brief but Affectionate History.GDP as a measure of economic growth dates from World War II. Back in the 17th and 18th centuries, interest was focused on counting much tax could be raised to fight wars. It wasn’t until the 20th century that there was demand for measuring what happens in an economy as a whole.It is useful for organisations such as central banks and government treasury departments to have a measure to look at when developing macroeconomic policy. However, they must be careful when being too reliant on something that is frequently subject to revision and/or the numbers recorded can fall within its margin of error. Unlike measuring the height of a hill, for example, there is no one correct answer in measuring GDP, and many judgement calls are implicit. Technological advances also present challenges, as GDP captures the number of items being produced, rather than their characteristics.Visit Bond...