Global Markets

Global Markets Update

Global Markets Update

We don’t expect higher inflation to derail US equities

While we think that inflation in the US will prove more persistent than both the Fed and investors appear to anticipate, we still expect the S&P 500 to make some further gains over the next couple of years.

11 June 2021

Global Markets Update

We expect the tailwind to stocks from commodities to fade

The rise in commodity prices has boosted some commodity-heavy stock markets, but we suspect that it will run out of steam before long, limiting those stock markets’ gains over the next couple of years.

10 June 2021

Global Markets Update

Assessing the outlook for EM monetary policy & LC bonds

While we expect the yields of 10-year emerging market (EM) local-currency (LC) government bonds to increase as the US 10-year Treasury yield resumes its rise, we think increases in yields will generally be smaller than in the US. This reflects our view that most EM central banks will tighten policy more slowly than investors currently anticipate.

4 June 2021
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Global Markets Update

We expect gradual increases in 10-year DM bond yields

We think most developed market (DM) central banks will look through temporary rises in inflation and leave rates unchanged until at least early 2023. Even so, we expect the yields of 10-year DM government bonds to rise in the next couple of years, although generally by more in the US than elsewhere.

Global Markets Update

Earnings expectations and the outlook for the S&P 500

We expect the S&P 500 to make only small gains over the next few years. But we think some sectors – such as financials – will continue to do better than the index as a whole.

Global Markets Update

Inflation and long-term US Treasury yields

We expect long-term Treasury yields to rise more decisively before long, driven by long-term real yields.

Global Markets Update

Euro-zone corporate credit spreads may fall a little further

While we don’t think there is much scope for corporate credit spreads generally to narrow much further from here, in our view spreads in the euro-zone could fall a bit more than those in the US or the UK. Drop-In: Great Inflation 2.0 – Are we facing a 70s revival? (1100 ET/1600 BST, Thurs 13th May) A special 20 minute briefing during which Jennifer McKeown, the head of our Global Economics Service, and Senior Global Economist Simon MacAdam will discuss whether advanced economies are in for a repeat of inflation levels last seen during the 1970s. Register here.

Global Markets Update

E-Z equities may still outperform, despite weaker recovery

We expect equities in the euro-zone to outperform those in the US between now and the end of 2022 even as the economic recovery in the former continues to lag that in the latter. Webinar Invite: The FX Outlook, 12th May 2021. Neil Shearing will host an in-depth discussion with our senior markets economists about the outlook for DM and EM currencies, including why we think the dollar will strengthen further and why the outlook for EM FX is darkening. Click here to register.

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