As the curtain falls on the era of pandemic-induced easy monetary policy, bond markets are readjusting. The US Federal Reserve has all but confirmed that it will start to taper its monthly purchases in November 2021, taking its foot off the accelerator so to speak. The Fed’s own projections also pointed to the possibility of interest rates going up in 2022, earlier than previously indicated.
US Treasuries have since sold off heavily, with 10-year bond yields rising to their highest level since June and triggering a decline in equity markets, before falling slightly at the end of last week. While this was largely due to the more hawkish tone from the Fed at its September monetary policy meeting, uncertainty around US legislative processes also contributed to last week’s sell-off in bonds.
In the UK, the Bank of England has also given indications that it was preparing to tighten policy due to mounting inflation pressures affecting the economy.
The governor of the BoE went so far as to suggest the central bank could raise rates as soon as November, even before the end of its asset purchasing programme. In the background, at least for developed markets, Norway’s Norges Bank raised rates by 25bps in September and lined up another hike for December.
Barring any substantial deterioration in economic conditions in either the UK or US economy, the likelihood of yields remaining high or pushing even further upwards looks strong. Emirates NBD forecasts the 10-year US treasury yield to be 1.75 per cent by December-end while 10-year gilt yields have already pushed beyond our expectation of 0.9 per cent by end of the year.
Tighter monetary policy, elevated (if transitory) inflation and expectations for continued economic growth will help support yields rising into 2022 as well.
But downside risks to yields remain apparent and these are largely policy-related. While the passage of last-minute legislation avoided a US government shutdown at the end of September, Democrat party infighting threatens their own legislative agenda while Republicans show no apparent urgency to support plans to raise the debt ceiling.
Longer-dated US treasuries could benefit from a flight to safety bid if there is anxiety that the US Treasury will fail to meet any payment obligations. We think a US default on debt payments is unlikely, but the longer this process takes, the greater the chance of a policy error.
Another downside risk for US treasury yields is slowing growth. Economic data has been mixed in recent weeks, with manufacturing holding up well while services sector growth has slowed as the Delta variant of the coronavirus continues to spread.
Weekly initial jobless claims increased in the latest reading and consumer sentiment is back near the pandemic lows of the second quarter of 2020. All eyes will be on the September non-farm payrolls data, which is due later this week after a much lower than expected jobs gain in August.
In the UK, the BoE will have to monitor the labour market implications of the end of the government’s furlough scheme, which expired in September. A surge in unemployment at a time when inflation is being driven higher by energy prices and supply chain disruptions could stay the BoE’s hand on wanting to move tighter on policy.
Beyond developed markets, tighter US monetary policy will weigh acutely on emerging markets too. An index of dollar-denominated emerging market bonds has declined 1.8 per cent since the middle of September with the yield rising to the highest level in over a year.
Pressure will grow on emerging market central banks to maintain inflows and potentially tighter policy further at a time when many of their economies are still early in the stages of pandemic recovery or vaccination programmes. The risk for emerging market assets, whether in FX or bond markets, looks broadly negative in the near term.
Khatija Haque is chief economist and head of research at Emirates NBD
The biog
Favourite hobby: I love to sing but I don’t get to sing as much nowadays sadly.
Favourite book: Anything by Sidney Sheldon.
Favourite movie: The Exorcist 2. It is a big thing in our family to sit around together and watch horror movies, I love watching them.
Favourite holiday destination: The favourite place I have been to is Florence, it is a beautiful city. My dream though has always been to visit Cyprus, I really want to go there.
Important questions to consider
1. Where on the plane does my pet travel?
There are different types of travel available for pets:
- Manifest cargo
- Excess luggage in the hold
- Excess luggage in the cabin
Each option is safe. The feasibility of each option is based on the size and breed of your pet, the airline they are traveling on and country they are travelling to.
2. What is the difference between my pet traveling as manifest cargo or as excess luggage?
If traveling as manifest cargo, your pet is traveling in the front hold of the plane and can travel with or without you being on the same plane. The cost of your pets travel is based on volumetric weight, in other words, the size of their travel crate.
If traveling as excess luggage, your pet will be in the rear hold of the plane and must be traveling under the ticket of a human passenger. The cost of your pets travel is based on the actual (combined) weight of your pet in their crate.
3. What happens when my pet arrives in the country they are traveling to?
As soon as the flight arrives, your pet will be taken from the plane straight to the airport terminal.
If your pet is traveling as excess luggage, they will taken to the oversized luggage area in the arrival hall. Once you clear passport control, you will be able to collect them at the same time as your normal luggage. As you exit the airport via the ‘something to declare’ customs channel you will be asked to present your pets travel paperwork to the customs official and / or the vet on duty.
If your pet is traveling as manifest cargo, they will be taken to the Animal Reception Centre. There, their documentation will be reviewed by the staff of the ARC to ensure all is in order. At the same time, relevant customs formalities will be completed by staff based at the arriving airport.
4. How long does the travel paperwork and other travel preparations take?
This depends entirely on the location that your pet is traveling to. Your pet relocation compnay will provide you with an accurate timeline of how long the relevant preparations will take and at what point in the process the various steps must be taken.
In some cases they can get your pet ‘travel ready’ in a few days. In others it can be up to six months or more.
5. What vaccinations does my pet need to travel?
Regardless of where your pet is traveling, they will need certain vaccinations. The exact vaccinations they need are entirely dependent on the location they are traveling to. The one vaccination that is mandatory for every country your pet may travel to is a rabies vaccination.
Other vaccinations may also be necessary. These will be advised to you as relevant. In every situation, it is essential to keep your vaccinations current and to not miss a due date, even by one day. To do so could severely hinder your pets travel plans.
Source: Pawsome Pets UAE
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Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Coal Black Mornings
Brett Anderson
Little Brown Book Group
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
