As expected, this week, central banks executed another round of interest rates hikes. This is the last one of a series of very quick hikes that they decided in order to regain the control of inflation. The Federal Reserve raised official rates of a total of 4.50% since last year, and the ECB increased interest…
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After a period of low interest rates, Central Banks around the would raised interest rates aggressively to contain inflation. The Federal Reserve led the way higher. In this post, we will examine the mechanics of how the central bank fixes interest rates and what are the main interest rates for short term investing.
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The fastest rises in history During the last few months, we have witnessed one of the quickest increase in official interest rates ever (in particular, we refer to the European Central Bank (ECB) and the US Federal Reserve (FED)).
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Since the beginning of March, a few incidents happened in the banking sector. This came quite unexpectedly at a time when everybody was saying that the banking sector is nowadays much more resilient than in the past. What went on and could this mean a new crisis like 2008?
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During the last few days, one important US bank was closed. It was all stunningly quick. Silicon Valley bank was considered one of the best US banks. In just a couple of days it failed, and it was the biggest banking failure of the last 15 years and the second ever.
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During the last years we have witnessed a period of inflation never seen in the last 40 years. With the benefit of hindsight, it might be interesting to reflect on what caused this spike in inflation.
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During 2022 we have witnessed a huge volatility in bond markets and also the forex market had some important moves. The euro against the dollar touched a low of 0.95 this summer and is now back above 1.08.
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2022 is proving to be the worst year of the last decades for diversified portfolios. In the past, we experienced equity indices losses that were much more severe than the current ones, but we never experienced this kind of correlated moves in which bonds fall together with stocks.
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The meaning of the concept of currency war has been reversed during the last few months. Until a few months ago the world was basically a deflationary one. Even if now the big issue seems to be inflation, deflation is probably even a bigger problem. Deflation means that prices tend to fall overtime. In such…
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As we have seen in a recent post (link to last bond post) the movements of the bond market during the last few months have been even more exceptional than the ones of the stock market, even if the latter often receive more attention from media.
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