We still expect higher yields & equity rotation in the US

The hawkish surprise delivered by the Fed at its latest meeting and the subsequent market reaction have not changed our view that the 10-year US Treasury yield will end the year higher and that the “rotation trade” in equity markets will resume before long.
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Global Markets Update

Assessing the market reaction to Omicron so far

This Update takes stock of the moves in developed market (DM) asset markets in response to the “Omicron” variant, and provides initial thoughts on how we think things might progress if some of the fears about it are realised.

3 December 2021

Global Markets Focus

Is inflation about to spell trouble for the stock market?

US inflation hit its highest level since the 1990s in October and has now reached a rate that, historically, has coincided with very poor stock market returns. Notwithstanding the uncertainty around the impact of the “Omicron” variant of the coronavirus, we don’t expect inflation to stay at quite such high levels, so we aren’t among those calling for a stock market crash driven by high inflation, or a decade of negative real returns like we saw in the 1970s. But we do think investors are underestimating the chance that inflation remains high enough to put the brakes on the stock market’s gains, which we think will be underwhelming over the next few years.

1 December 2021

EM Markets Chart Book

Contagion from Turkey’s crisis likely to remain limited

Spillovers to other emerging markets from Turkey’s ongoing currency crisis have been limited so far and we think this will remain the case even if Turkey’s financial markets remain under pressure.

24 November 2021

More from Global Markets Team

EM Markets Chart Book

Toning down our optimism about EM assets & currencies

We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years.

1 April 2021

DM Markets Chart Book

We forecast higher yields, a stronger $ & gains in equities

We now think that 10-year government bond yields in most developed markets (DMs) will rise further. However, we think that they will climb more rapidly in the US than elsewhere in the developed world. As such, we have revised up our forecast for the US dollar, and expect it to strengthen somewhat between now and end-2022. Nonetheless, we are sticking to our view that DM equities, including in the US, will generally make further ground as economies re-open and corporate earnings rebound.

31 March 2021

EM Markets Chart Book

We don’t think we are in for another “taper tantrum”

We still expect emerging market (EM) “risky” assets and currencies to make further gains this year, despite growing concerns about another “taper tantrum”.

23 February 2021
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