Thank Fathom it’s Friday

OIS forwards as a Keynesian beauty contest

Andrew Brigden 17 January 2020|

This week’s TFiF goes gingerly down the rabbit hole of market pricing, using implied expectations about UK Bank Rate as an example. What do investors base their forecasts on, and are they any good at it? You might think that they should devote all of their efforts to a careful consideration of the various bits of publicly available information that ought to influence the MPC’s decision. Well, they probably spend a bit of time thinking about that. But in truth, what matters far more to every individual investor, is what every other individual investor is up to — a point first recognised by the famous UK economist John Maynard Keynes, when he described the act of speculating