Limited scope for valuations to push risky assets higher

In our view, changes to the economic and policy outlook since the pandemic mean that corporate credit spreads in the US may remain lower than in their recent past for some time. Nonetheless, we see limited scope for them to fall much further from here. This, coupled with our view that US long-dated TIPS yields will rise gradually over the next couple of years, suggests to us that further gains in US equities will be relatively small, and increasingly driven by expectations for strong earnings rather than higher valuations.
Jonas Goltermann Senior Markets Economist
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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

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Is inflation about to spell trouble for the stock market?

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Contagion from Turkey’s crisis likely to remain limited

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Taking stock of the carry trade after the FOMC’s surprise

While the shift towards rate hikes in several key emerging markets has provided a boost to their currencies, we doubt that the carry trade will fare as well in the second half of the year.

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This may be as good as it gets for the Aussie and Kiwi

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6 July 2021

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The US dollar rally may have further to run

The US dollar is ending the week stronger against most currencies, although it has fallen back a little this afternoon despite the stronger-than-expected non-farm payrolls report. While that reaction is perhaps a bit puzzling, the bigger picture is that the greenback has extended its post-FOMC rally against the other major currencies this week. We expect it to make further headway, provided that US data continue to come in strong.

2 July 2021
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