BOE Cunliffe: Big LDI funds have got to point where on avg. they could absorb 200BP hike

BOE Cunliffe is on the wires saying:

• Big LDI (liability driven investment) funds have got to a point where on average they could absorb a 200 basis point rise in yields
• As interest rates go up there are areas that are vulnerable especially in emerging markets
• Weaker areas are predominantly in non-bank finance
• We do not run stress tests on LDI's
• There needs to be more coordination between central banks and security regulators
• LDI episode is mostly behind us. Financial markets will have to adjust to government fiscal policies
• we are sufficiently confident in the gilt market to set out QT program

It is interesting that Cunliffe sites the abilities of LDI's to aborb a 200 basis point rise, but they do not run stress tests on LDI's. Hmmm.

/inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term