Global Markets

Global Markets Update

We think the sell-off in DM bonds will resume

While the yields of long-dated government bonds in the euro-zone, UK and US have dropped back a bit in recent days, we think they will rise between now and the end of 2023. We expect increases in yields to be particularly large in the US given our view that high inflation there will prove persistent.

14 October 2021

DM Valuations Monitor

Assessing the outlook for US equity valuations

We forecast that the valuation of the US stock market will deflate a bit further over the next couple of years, though we are not expecting a sharp decline.

8 October 2021

Global Markets Update

Commodity prices and global equity markets

We think the prices of most commodities will fall over the next couple of years, and that this will prove to be a headwind for many countries’ stock markets. But the strength of that headwind will vary significantly, in our view, even among the most commodity-intensive economies.

7 October 2021

Our view

We forecast that long-term bond yields will rise across most major economies and especially in the US, where we think inflationary pressures are particularly strong. Otherwise, we think that the returns from most risky assets from here will be far less impressive than they have been since the spring of last year. That reflects not only a view that bond yields will climb further, but also how we see limited room for global growth to surprise on the upside and how, in many cases, valuations already appear quite stretched. Meanwhile, we think that the US dollar will grind higher from here on the back of a hawkish shift by the Fed relative to most other major central banks, and ongoing uncertainty around the strength of the global recovery.

Latest Outlook

Global Markets Outlook

We don’t expect the rally in bond markets to continue

While long-dated government bond yields have plummeted in recent months, we suspect that high inflation and the prospect of tighter monetary policy will see them turn a corner before long. We forecast long-term yields to rise across most major economies, especially in the US, where inflationary pressures look particularly strong. Higher yields may also help limit the upside for risky assets, such as equities and corporate bonds. Their valuations already appear fairly stretched in many cases. And when it comes to equities, an extremely strong rebound in corporate earnings already appears to be discounted. As a result, we forecast only small gains in equities across both DMs and EMs, and expect credit spreads to narrow only a little, if at all, from here.

30 July 2021