Bonds
'Coupling' of domestic bonds to foreign markets increases in turbulent times
Chilean corporate bond returns are affected by long-term government bond returns and by foreign macroeconomic shocks in the eurozone and the US
Norwegian governor backs SWF rotation into higher-yielding equities and real estate
Øystein Olsen says it is ‘natural' for the country's pension fund to invest in different types of real assets; talks up the possibility of an above-average market return
Central Bank of Iceland to offload Kaupthing bonds acquired in the crisis
The bank will sell $860 million worth of covered bonds issued by Kaupthing Bank before the financial crisis over the next five years
Credit ratings hit prices 'significantly' more in times of crisis, paper finds
Effects of rating actions on market prices not crucial during favourable market conditions but 'very significant' in times of crisis; analysis covers ratings and prices of 16,500 bonds over 12 years
Risky loans reach pre-crisis levels as banks are increasingly bypassed, warns BIS
Basel-based organisation also frets over impact on corporate bond markets from interest rate normalisation; cross-border lending falls in Q2 as non-banks play increasingly important role
BoE paper proposes new sovereign debt instruments
Economists from the UK and Canadian central banks says that sovereign cocos and GDP-linked bonds could help reduce the likelihood of liquidity and solvency crises
Danish authorities tackle mortgage bond refi risk
Lars Rohde hails a new bill forged by the central bank and the government as the solution to the ‘excessive refinancing risk’ in Denmark’s mortgage bond market
Central Bank of UAE set to bolster ‘under-developed' local bond market
UAE has looked to economies with strong trade balances as role-models to help develop a domestic bond market; may issue government debt in the coming years
Robert Pringle’s Viewpoint: ECB needs to play ‘chicken’ to force reform of Europe’s banks
The ECB won a game of brinkmanship with governments to secure the establishment of the bail-out fund. It needs to use the same tactic with three clear elements to force through bank reform
Canadian yields shown to be less sensitive to data shocks than US or UK
Working paper from the Dutch central bank shows that at the zero lower bound, Canadian government bond yields are less sensitive to surprising domestic data than US or UK equivalents
ECB research examines ‘inverted V’ yields around bond auctions
Working paper finds yields spiked around auctions during crisis-hit Italian bond issues, creating additional costs for the government that Germany did not face
German banks move to lower-risk sovereign bonds
Deutsche Bundesbank discussion paper investigates banks exposures to sovereign debt and finds they are increasingly investing in bonds from larger countries with lower inflation
Reserve accumulation enhances welfare if coupled with capital controls
Foreign reserve accumulation is part and parcel of a growth strategy based on strong capital investment in a financially constrained economy, according to a Banque de France research paper
Kenyan governor urges bond market reform
Njuguna Ndung’u calls for a wider trading platform in the secondary market to incorporate OTC products; criticises the ‘slow pace’ of reforms so far
Croatia among EU members whose spreads are most affected by fundamentals
While spillovers from external shocks remain the dominant factor in spreads EU-wide, Croatia is among those where fundamentals are playing an increasingly influential role
RBI launches ‘open-ended' measure to bolster weakening rupee
Weekly sales of short-term debt to absorb liquidity is the latest in a string of attempts to rein in Indian foreign exchange volatility
NY Fed researchers explore long-term rate rise
Ten-year Treasury yields rose ‘sharply’ between April and July; researchers attribute this to an increase in the compensation investors were demanding to hold them
BoJ policy board member signals possibility of further measures
Takehiro Sato says the Bank of Japan could employ additional policy tools in its bid to double the monetary base; Abenomics gets public backing in parliamentary election
Eurozone core ‘regain net influence’ over bond markets, finds Irish paper
Technical paper examines spillovers in the eurozone’s sovereign debt markets; finds the impact of stressed countries on the wider region has diminished
BoJ policy board divided over bond markets
Minutes from the Bank of Japan’s June meeting reveal members debated whether to introduce additional measures to stabilise long-term interest rates
Korean MPC member says economy ‘relatively safe’ from impact of Fed taper
Woosik Moon says emerging economies will see long-term interest rates rise as global liquidity contracts, but the strength of Korea’s economy should insulate it against the turbulence
Japan government pension fund re-jig could see BoJ pick up $80bn in JGBs
Japan’s sovereign welfare fund signals could sell up to ¥8 trillion worth of domestic bonds; BoJ could potentially absorb them as it seeks to drive up the country’s monetary base
India issues inflation-indexed bonds to curb gold imports
India's debut issuance of inflation-linked bonds four times over-subscribed despite the launch coming as wholesale price inflation has tapered off; could be credit negative for India
Caruana warns of yield curve 'global steepening'
BIS general manager Jaime Caruana says central banks must consider the effect on global bond markets of rising rates and shrinking balance sheets