The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Bond Outlook April 18th

The news this week, including a still weaker USD and a politico-economic rapprochement of China and Japan, suggest global rebalancing is advancing nicely. US household consumption has yet to moderate.

Bond Outlook [by bridport & cie, April 18th 2007]

There was a time when inflation in the UK led to a weaker currency to maintain a semblance of international competitiveness in trade terms. Now, the effect is quite the opposite: the strong likelihood of the BoE lifting the bank rate further has pushed Sterling to uncomfortably high levels. Within the much tighter standards for inflation reigning today, the UK economy is overheating, along with the euro zone, whereas the US economy is not. The implications for interest rates are obvious: higher in Europe, but unlikely to be raised in the USA. The 5¼% US rate is, fortunately for the Fed, quite comfortable. The economy would appreciate a lower rate, but the impact of a drop on the already weak USD stays the hand of the Fed. We, along with the markets, would suppose no change in the Fed rate for months to come.


In February it looked as though almost all the excesses in financial markets were unwinding: the JPY carry-trade, ridiculously low spreads on credit, high stock valuations. All are now back in full flood.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree