HomeRisk Commentary

The self-fulfilling prophecy of public sector pensions

22 March 2024Pensions, Risk Commentaryeducation, pensions, public policy, schoolsNick Dunbar

How costly are unfunded public sector defined benefit pensions? The question looms large in the economic future of the UK.

Crunch time for LOBO derivatives

13 November 2023Municipal Finance, Risk CommentaryBarclays, interest rate swaps, interest rates, LOBOs, options, RBSNick Dunbar

UK interest rates have risen so much, that obscure options buried in local authority loan contracts are about to be triggered for the first time

Money funds ride the QT wave

19 October 2023Funds, Risk Commentarycash, deposits, Federal Reserve, government bonds, money market fundsNick Dunbar

The seven biggest money market funds used the Fed’s overnight repo facility to help boost their assets by 50% in just 18 months, while bank deposits have plunged. Now, with quantitative tightening, their strategy is changing.

Charting China’s real estate bond meltdown

29 August 2023Credit, Risk CommentaryChina, corporate bonds, distressed debt, real estateNick Dunbar

Our corporate bond tool shows that dollar-denominated Chinese real estate bonds are collectively worth just 12% of their total value two years ago. By analysing iBoxx departures and distressed prices, we firm up this analysis and look at the wider implications for China’s troubled economy.

The last rites of BP’s pension fund

14 July 2023Articles, Pensions, Risk Commentaryinterest rates, pensions, taxationNick Dunbar

BP’s pension scheme was once a leading stakeholder in UK companies, but now it’s been ‘de-risked’ and may soon be hived off to an insurer. The story encapsulates the slow decline of Britain’s private sector defined benefit pension system.

How generative AI made Nvidia a giant of the S&P 500

5 May 2023Risk Commentary, TechnologyAI, artificial intelligence, equities, Google, Microsoft, Nvidia, OpenAI, semiconductorsNick Dunbar

11 years ago, Geoff Hinton and two grad students used a pair of GPU chips to win an image classification contest. Now these chips are powering the generative AI boom and have doubled Nvidia’s market cap.

Banks can’t hide from the pain of underwater bond investments

29 November 2022Banks, Risk CommentaryAccounting, government bonds, interest rate risk, investments, mortgage-backed securitiesNick Dunbar

The biggest US banks amassed $2.2 trillion of government and mortgage bond investments, but now the portfolios are underwater and banks must hold them to avoid recording losses. This will have a lasting effect on deposits and the impact of Fed policy.

When linkers bite back

21 October 2022Economics, Risk Commentaryforecasting, inflation, inflation-linked bonds, national accountsNick Dunbar

Inflation-linked bonds are proving costly to governments that issued them, and in the case of the UK, markets imply the pain will last for years to come.

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