By Reuters Staff
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LONDON (Reuters) - Britain’s central bank should “lean strongly against” downside risks to recovery from the COVID pandemic and be ready to loosen policy further if needed, Bank of England policymaker Jonathan Haskel said on Friday.
FILE PHOTO: Professor Jonathan Haskel, who has just been appointed to the Monetary Policy Committee of the Bank of England, is seen in this undated portrait released by HM Treasury in London, Britain, May 31, 2018. Jason Alden/UK Treasury/Handout via REUTERS
Commercial banks should follow BoE advice to make sure they are ready to implement negative interest rates, although the central bank does not yet know if they will be needed later this year, Haskel added.
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FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won
NEW YORK (Reuters) - A major exchange-traded fund tracking the U.S. investment-grade corporate bond market fell on Friday to its lowest since May 2020, after blowout employment data and comments from Federal Reserve Chair Jerome Powell on Thursday increased duration risk.
BlackRock’s iShares iBoxx Investment Grade Corporate Bond ETF fell to a 10-month low of $129.27 and was last trading down 0.33% to $129.51. Since the start of the year, LQD has lost more than 6%.
The improving economic data and increase in inflation expectations that have driven the U.S. benchmark 10-year Treasury yield to its highest in more than a year have also driven yields up - and prices down - on investment-grade debt. Investment-grade bonds tend to have longer durations than those in the junk-rated market. They are therefore more sensitive to inflation risks,
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LONDON (Reuters) - Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.
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In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.
“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”
Investors piling into tech and financial stocks helped equity funds attract $46.2 billion in their third-largest inflow on record in the week to Wednesday while inflation linked bonds also shone, BofA's weekly fund flow data showed on Friday.
The world's largest asset manager BlackRock has cut its stance on government bonds, preferring equities in light of the COVID-19 vaccine rollout and potentially up to $2.8 trillion of additional U.S. fiscal spending this year.