Relative equity valuations amid a bond market tantrum
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Relative equity valuations amid a bond market tantrum

We suspect the sectors of the equity market where valuations are the lowest will continue to weather the storm of rising bond yields a bit better than others. Drop-In (13th April, 16:00 SGT/09:00 BST): Will political turmoil in Pakistan and Sri Lanka lead to debt defaults? Join our EM economists this Wednesday for a discussion about economic and political turmoil in South Asia. Register now
Thomas Mathews Markets Economist
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DM Markets Chart Book

We expect even higher yields and lower risky asset prices

We think developed market government bond yields will rise further while equity and corporate bond prices fall further, as central banks press ahead with tightening and the global economy slows. Drop-In (Weds, 6th July): How far has 2022’s food supply shock raised the stakes for monetary policymakers and governments? Join this 20-minute session to find out about the market outlook and the economic risks around elevated food prices. Register now

29 June 2022

Global Markets Update

Answering your questions on our market forecasts

We held a Drop-In on Wednesday to discuss what the evolving outlook for monetary policy and global growth means for our markets forecasts. This Update recaps the key questions we addressed in the Drop-In and answers several of the questions that we received but didn’t have time to answer during the event.

24 June 2022

Global Markets Update

We now expect higher and earlier peaks in bond yields

We now think that the yields of 10-year developed market government bonds will peak earlier and, in some cases, at higher levels than we previously expected. That reflects a view that tightening cycles in many DMs will be more front-loaded and aggressive than we previously thought. Markets Drop-In (22nd June, 10:00 ET/15:00 BST): Join our Markets team for this special briefing on the outlook for equities, bonds and FX and a discussion about revisions to our forecasts. Register now

22 June 2022

More from Thomas Mathews

Capital Daily

What quantitative tightening could mean for Treasuries

We think quantitative tightening by the Fed will contribute to Treasury yields rising a bit further.

6 April 2022

Global Markets Update

The global tightening cycle and bond yields

This tightening cycle looks set to be much more synchronised across developed market economies than the last one, which we think creates more scope for rises in bond yields across countries but could limit any further flattening of the US yield curve.

5 April 2022

Global Markets Update

Petrodollars probably won’t save Treasuries this time

The reinvestment of oil revenues into US markets probably helped avert a rout in Treasuries during the mid-2000s hiking cycle, but even with oil prices on the rise again we don’t expect so-called “petrodollars” to halt the current slide in Treasuries. Instead, we think yields will continue to rise as the Fed tightens. Commodities Drop-In (24 March, 11:00 EDT/15:00 GMT): Our Commodities team will be exploring how the war in Ukraine is shaking up commodity markets, from oil to wheat, while tackling some of the big market questions – not least whether we’re in for 1970s-style oil supply shocks. Register here.

24 March 2022
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