James Carville was candidate Bill Clinton’s chief strategist for the 1992 election. When asked to emphasise the single most important issue to voters, Carville responded: “It’s the economy, stupid!” Incumbent President George W.H. Bush at that time had seen his poll numbers surge post the successful Operation Desert Storm in Kuwait, but at home the US economy had started to slip into a recession, and Carville made sure no opportunity was wasted to emphasise the ‘Bush recession’. Bush lost the 1992 election and followed in the footsteps of Jimmy Carter in 1980, who also lost in his re-election attempt against a backdrop of poor domestic economic performance. All Presidents who have sought re-election during periods of economic growth have easily secured their second terms; Reagan (1984), Clinton (1996), Bush II (2004), and Obama (2012).

A quarter is a long time in politics

Up until January 2020, Donald Trump never let an opportunity go by without...

M&G’s Jim Leaviss interviews David Smith, author of 'Something will turn up: Britain’s economy, past, present and future'.The premise of Smith’s book (its title is based on the famously optimistic outlook of Charles Dickens' Mr Micawber) is that while we have frequently seen gloomy predictions for the UK economy, in reality, something always does ‘turn up’. However, this something is often the result of deliberate policy action. Smith examines some of the UK’s biggest economic developments and challenges of recent decades. Having been one of the world’s leading manufacturers for much of the 20th century, the UK was guilty of serious complacency during what Smith calls the ‘dreadful decade’ of 1973-1983. Equally, too much importance was placed on maintaining a strong currency. Meanwhile, Margaret Thatcher’s economic policies were relatively strong from a micro perspective but less so from a macro one.Smith provides his own ranking of the UK’s post-war Chancellors. Here, it...

This document sets out our plans for data collection, compilation and publication of our various prices statistics following the implementation of social distancing policies and movement restrictions brought into effect on 23 March 2020 as a result of the coronavirus (COVID-19) pandemic. This is in line with international guidance on the compilation of the Harmonised Index of Consumer Prices (HICP) during the COVID-19 pandemic. Our range of consumer price statistics includes the Consumer Prices Index including owner occupiers’ housing costs (CPIH), the Consumer Prices Index (CPI), the Retail Prices Index (RPI) and experimental publications, such as the Household Cost Indices (HCIs), which are published annually. We also collect business prices – input and output Producer Price Indices (PPIs) – as well as house prices and private rental price data.

For consumer price statistics, approximately 80% of the price quotes in our CPIH sample (excluding administrative data...

M&G’s Jim Leaviss interviews former Bank of England Deputy Governor Paul Tucker, author of Unelected Power. Tucker is currently a Fellow at the Harvard Kennedy School in the US, and sits on the Systemic Risk Council.The trend towards greater independence for central banks in the past decades has generally been supported by markets, politicians and our wider society. After all, independence of these institutions as they aim to hit inflation targets has resulted in lower borrowing costs for economies, as the inflation risk premium has been reduced – interest rates are no longer lowered at the whim of politicians in need of electoral boosts. But the Great Financial Crisis and subsequent Eurozone debt crisis raised some awkward questions about the scale of the powers now in the hands of unelected central bankers. Should these technocrats have the ability to decide which banks live and which banks die? Or to insist on austerity in the case of a sovereign debt crisis? Is the QE...

“Venetians, Volcker and Value-at-Risk: 8 centuries of bond market reversals”. Jim Leaviss interviews Paul Schmelzing.It’s rare to find a piece of writing that everyone in bond markets has read and is talking about, but a blog in January 2017 by Paul Schmelzing on the Bank of England’s Bank Underground site did just that. Paul is a visiting scholar from Harvard University currently undertaking research at the BoE. In the blog, he takes a very long term view of eight hundred years of bull and bear markets in government/risk free bonds. Watch the video to hear him discuss some of the most significant bull/bear market events in history, and where the current 30 year global bull market run fits in.Visit Bond Vigilantes: https://www.bondvigilantes.com/?utm_s...

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While it is certainly too early fully to understand the impact of COVID-19 on economies around the globe, one thing is for sure: the shock to economic activity is going to be enormous in the short run as sectors of the economy simply shut down. Having experienced one of the biggest corrections in history last month, financial markets have started to be somewhat more upbeat of late. Market participants have welcomed the robust and coordinated response from policy-makers around the world. Central banks of major economies have stepped up their game, using a whole repertoire of unconventional measures to ensure markets continue functioning. Just last week, the Fed went beyond what any central bank has done before, by expanding its purchases to include high yield exchange traded funds and fallen angels. This will undoubtedly give a confidence boost to high yield investors and the BBB-rated segment of the IG market.

We have also seen a conventional policy response from...

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

If that is the case then developed economies have not encountered any muggers, armed robbers or hit men for some time.

That quote came from Ronald Reagan, candidate for US President in the late 1970s, back when controlling inflation was one of the biggest challenges for governments and central banks.

We are a world away from there today, where the bigger danger is deflation. Central banks and governments are doing their utmost to stimulate the economy by any means possible, including low/zero rates, buying back government debt and pouring out direct stimulus to combat the slowdown caused by COVID-19.

Where did the mugger go? Globalisation ended his career. One by one, as markets began liberalising, there were no pinch points for the mugger to exploit. From the single market in Europe and NAFTA in North America, to China (and the countless...

In the last two weeks, both the ECB and the PRA effectively demanded that banks stop paying shareholder dividends and buying back stock for at least six months. The announcements, even though they were leaked in the press well before official confirmation, sent bank share prices plummeting, as investors saw what had been improving income streams in recent years come to an abrupt halt. It also threw a spanner in the works of the market for bank capital securities. Are the banks in so much potential trouble that they required this unprecedented, capital-conserving move? Are regulators still trying to punish the banks a decade after the Great Financial Crisis (GFC) of 2008-09? Are other bank capital instruments next in line for a blanket payment restriction? The answers to these questions are no, no, and no.

There is little doubt that loan losses at banks will rise considerably as a result of the Great Coronavirus Crisis (GCC). And depending on its longevity and...

In the last two weeks, both the ECB and the PRA effectively demanded that banks stop paying shareholder dividends and buying back stock for at least six months. The announcements, even though they were leaked in the press well before official confirmation, sent bank share prices plummeting, as investors saw what had been improving income streams in recent years come to an abrupt halt. It also threw a spanner in the works of the market for bank capital securities. Are the banks in so much potential trouble that they required this unprecedented, capital-conserving move? Are regulators still trying to punish the banks a decade after the Great Financial Crisis (GFC) of 2008-09? Are other bank capital instruments next in line for a blanket payment restriction? The answers to these questions are no, no, and no.

There is little doubt that loan losses at banks will rise considerably as a result of the Great Coronavirus Crisis (GCC). And depending on its longevity and...

A surprise outing in a fighter jet unnerved one defence company executive so much he accidentally ejected himself while flying at over 500km/h (320mph), an investigation into the debacle in France has found.

The 64-year-old civilian got the most unwelcome ride of his life after the force of the take-off made him “float” off his seat, causing him to stand up and involuntarily grab the ejection handle to steady himself.

Air accident investigators found a series of errors in the lead-up to the incident, including ignored medical warnings that the passenger should not undergo to the 3.7g of force generated by the take-off, and loose seat straps that allowed him to float up. He also lost his helmet while being ejected.

The man had never expressed any desire to fly in a fighter jet and had no previous military aviation experience, investigators said. His heart was racing at between 120 and 145 beats per minute beforehand. The flight had been a...

1. What’ s happened to the high yield market in the last month?

We’ve seen negative returns of -12.7% for the global high yield market. Following a weak February this brought the Q1 return to -13.7%. To put this in context, this was the second worst month and second worst quarter since 1998. Only October 2008 and Q4 2008 saw a more negative drawdown for the market.