It’s rare to start a commentary with a restaurant review but tonight’s feast justifies raves.  Pearl Restaurant, 252 High Holborn, London, telephone +44 (0) 20 7829 7000, deserves 5 stars for superb service, exquisitely delicious cuisine, ambiance and a welcoming attitude to this weary traveler.

They teased with imaginative canapés that burst with flavor in the mouth.  Three seared scallops, accompanied by a parsley puree joined chicken oysters and the garlic puree to complete round one.  Venison, moist and pink, with a beet puree were joined by a hot tart of thinly sliced beets atop ground venison placed on a creamed Swiss chard completed round two.  A delicious full bodied glass of Gigondas accompanied each round.  Tonight’s culinary delight proves you can get a great meal in London.  You can find the Pearl Restaurant next to the Renaissance Hotel Chancery Court.  Enjoy!

Traffic in London is a mess.  Forty thousand students carrying signs which read, “F**K FEES” have tied up the town into knots.  They seem to feel they are entitled to free education with no requirement to repay a student loan.  The politics are clear.  A political party won parliamentary seats by promising the continuation of the student subsidy. Now it wants to change the rules.  Hence, students and others claim politicians lied to them.  There is turmoil in British politics.  It reminds me and some friends at the FT of the days when George Bush No. 1 said, “read my lips” and, subsequently, lost his re-election. 

In the UK, monetary policy remains frozen at the level of QE already established.  Budgetary constraints, real estate valuation declines and the forthcoming regulatory constraints occupy the thoughts of the financial community.  Uncertainty here is high. 

One discussion this afternoon focused on the intense bond market sell-off which Americans view as the rise in yields on the 10-year Treasury note. 

We discussed it at some length.  Little noted in America, but apparent to global observers, is that the phenomenon is worldwide.  The Japanese 10-year government bond rose in yield by about the same percentage as the US benchmark 10-year Treasury note.

The Euro benchmark, the German Bund, did about the same.  So did the British benchmark. 

In meetings today we speculated that the sell-off is not a US only phenomenon.  We speculated that it is more than a reaction to Bernanke’s QE2.  If all benchmark 10-year debt is selling off by about the same amount in price change, could it be that this selling is the reallocation of globally indexed funds away from sovereign debt and into something else?

Think of yourself as a Persian Gulf fund.  You usually hold foreign sovereign debt in proportion to an index or benchmark.  Now you want to reduce your exposure to some of the countries in the index.  You either have to sell proportionately from all of the countries in the index or you will face a concentration that violates your index or benchmark.  Worldwide sell-off in benchmark sovereign debt suggests this reallocation is underway.  Otherwise, how can you account for the Japanese government bond, the German Bund and the US Treasury note all moving in a correlated way?

Many foreign holdings are routed through London.  Reports show these securities as sourced in the UK.  However, everyone here knows the origins of these monies are not British.