Core markets improving, but pockets of risk remain

Strains in financial markets are continuing to ease slowly as central banks’ efforts contain the fallout from the pandemic take effect and equity markets rebound on hopes that the spread of the virus is slowing. But vulnerable sovereigns remain in the firing line with limited support.
Jonas Goltermann Senior Markets Economist
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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

Global Markets Update

We doubt global saving will stop US yields from rising

In the early 2000s, a ‘glut’ of global saving may have helped restrain rises in long-term US bond yields, even as investors began to discount tighter monetary policy. We don’t think that similar factors explain the latest fall in yields, nor do we expect them to prevent yields from rising over the next couple of years.

28 July 2021

Global Markets Update

We expect E-Z “peripheral” spreads to remain low

While we no longer expect peripheral spreads to narrow this year, we still think that they will remain close to their current levels, which are close to the lowest since the Global Financial Crisis.

23 July 2021

More from Jonas Goltermann

FX Markets Update

What to make of the commodity currency divergence

Several emerging market commodity currencies have struggled this year, despite the rally in most commodity prices. We think that most will face further headwinds, even the current valuation gap may provide some buffer.

1 June 2021

Capital Daily

We don’t expect the renminbi’s strength to last

While the renminbi has appreciated recently – to the point that policymakers have stepped in to slow its rise – we continue to think that it will end the year weaker against the US dollar.

1 June 2021

FX Markets Focus

A primer on our new FX Markets service

The purpose of this Focus is to introduce our new FX Markets service, which we launched in May 2021. It is split into three sections. The first provides an overview of the new service. The second explains our approach to forecasting currencies. The third goes through some of the key tools that we use to monitor currency markets and inform our forecasts.

27 May 2021
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