The U.S. economy is still running too hot for comfort. Prices rose in January by 0.5% from the prior month, nudging the annual increase up to the psychologically testing 3% threshold. It’s another roadblock for further rate cuts from the Federal Reserve. More importantly, it leaves even less room for President Donald Trump, whose tariff plans could stoke inflation further. Something must give – raising the specter of recession. Inflationary pressure is the result of a gaggle of disparate causes: egg prices were up 15% over the prior month; car insurance is nearly 12% more expensive than last year. Sure, prices for

U.S. government bond markets are feeling the squeeze from all sides. Yields on 10-year government debt have dropped in recent weeks amid signs of slowing growth and investors’ reflexive flight to safety following President Donald Trump’s tariff talk. But buyers should beware a false sense of security: blown-up deficits, a major trade war, and something going haywire in tech tycoon Elon Musk’s forceful takeover of U.S. government payment systems all introduce major and sometimes opposing risks, making the future direction of yields hard to predict. The only guarantee is volatility. In the month after Trump’s election victory in early November, yields

The U.S. Constitution gives Congress the power of the purse, but President Donald Trump interprets the foundational document differently. His acting budget chief issued a two-page memo, citing “wokeness” and “Marxist equity” as if they were spending line-items, that freezes what the agency says is $3 trillion in federal grants and loans. Even if only temporary, as the administration claims, the decision will upend financial planning for chipmakers, road builders, medical researchers and more. If no one stops the overreach, the economic consequences may be more dire. There was no advance warning that Trump would blatantly contradict the separation of powers. The vagaries

Now is a good time to take a spin in a new convertible. Refinancing needs and higher interest rates will refuel the crossbred bonds that once helped springboard Citadel founder Ken Griffin from Harvard student to billionaire hedge fund manager. And new features should tempt investors to ride off with them again. Convertible notes that provide steady income, but which can turn into shares at pre-agreed prices, sputtered after a $370 billion pandemic-era boom in 2020 and 2021. Roaring stocks ultimately made the equity piece more alluring, even enabling dozens to be sold bearing zero interest. Emblematic of the crop

Western leaders are giving Vladimir Putin a rational default card. Sanctions give the Russian president more reason to renege on at least some of his $200 billion of sovereign debt. The fallout could leave creditors stuck for years. Judging by its balance sheet, Russia isn’t an obvious default candidate. When the country last reneged in 1998, its borrowings exceeded 130% of annual output. Last year they were less than 20%, only a fifth of which was in foreign currency. That gives Putin a cushion to cope with a collapsing currency and shrinking economy. The spiking crude price will also help

The yield on Sri Lanka’s ten-year government bonds rose by 430 basis points last year and concern is mounting regarding the sovereign’s solvency. Yields above 12% are not unusual for the island nation, but a 7 percentage point spread over the policy rate reflects an increased pricing in of risk. The answer to the question of whether Sri Lanka will ultimately be forced to default on its debt is finely balanced. Fathom’s Financial Vulnerability Indicator (FVI) is flashing red for a number of countries around the world. This note explains the factors specific to Sri Lanka and assesses the reasons

Fathom’s Financial Vulnerability Indicator (FVI) is a tool that measures financial risk in 176 countries; a composite reading, made up of four underlying FVIs, is available on Refinitiv’s Chartbook. The FVI combines more than 40 years’ worth of high and low frequency, macro and financial market data in a rigorous analytical framework to provide an instant, comparable, intuitive measure of financial vulnerability. It also measures country risk to four different types of financial crisis in raw probability terms, own-country normalised terms (i.e. how risky that country is relative to its past, in z-scores) and global normalised terms (i.e. how risky

Fathom’s Sovereign Fragility Index (SFI) aims to provide an objective measure of the underlying risk attached to government debt. Therefore, a comparison of the SFI-implied and observed spreads is one way to observe the effects of unconventional monetary policy and swings in market sentiment. At present, government bond yields remain significantly below the levels implied by the SFI across most of the euro area periphery with financing conditions relatively benign. Italy, however, remains an exception to this with ten-year yields remaining above the 2.5% predicted by the SFI, amid the political uncertainty generated by the government’s confrontation with the EU.

With real GDP growth of 7.8%, the Irish economy was among the fastest-growing developed economies in 2017, eclipsing the rates of growth achieved by both India and China. However, as previous Fathom research has highlighted, the treatment of global profits from multinationals located in Ireland has led to an overstatement of economic activity. To strip out these distortions, Fathom created a Measure of Irish National Income (MINI). This suggests that economic output may be around 40% lower than implied by official data. However, in 2017 the MINI grew by 5.7% in real terms (deflated by the official GDP deflator). This has