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New forecasts for US Treasuries & the S&P 500

We think the sell-offs in US government bonds and equities have further to run, and have revised our forecasts for 10-year Treasuries and the S&P 500 accordingly. 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
Thomas Mathews Markets Economist
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US Economics Update

Fed steps up tightening amid worsening inflation

The Fed’s larger 75bp rate hike came as little surprise to the markets following the worse than expected May CPI data and Monday’s tip-off in the Wall Street Journal. Our view that inflation will remain uncomfortably high and that the economy will avoid a recession means we expect the Fed to follow through on plans to continue tightening rapidly, with rates peaking at the upper end of the 3.5%-4.0% range officials now expect early next year.

15 June 2022

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Global Markets Update

What a Taiwan Strait crisis could mean for markets

While China-Taiwan tensions haven’t yet caused ructions in global financial markets, any escalation that threatened to disrupt trade and/or financial flows almost certainly would. This Update explores the potential ramifications of such an event across bond, equity and FX markets. Markets Drop-In (9th Aug): Chief Markets Economist John Higgins leads this 20-minute briefing on our latest quarterly Outlook reports from our Global Markets, Asset Allocation and FX Markets services. Register now.  

5 August 2022

Global Markets Outlook

We think the latest asset price rallies will prove short-lived

We doubt the recent rallies in global bond and equity markets will be sustained over the remainder of the year. While we no longer think the 10-year US Treasury yield will exceed its June peak, we still expect it to rise as the Fed delivers a bit more tightening than investors now seem to anticipate. And we think government bond yields elsewhere will increase for similar reasons. We expect that, combined with a deteriorating economic backdrop, to place renewed pressure on “risky” assets; we forecast major benchmark equity indices – in both developed and emerging markets – to fall further this year, and expect corporate bond spreads to widen. But next year we think both “safe” and risky assets will fare a bit better, as central banks transition to easing mode and the economic backdrop starts to improve.

3 August 2022

Global Markets Update

A brighter outlook for EM local currency bonds

We continue to expect the yields of 10-year emerging market (EM) local currency (LC) sovereign bonds to rise over the rest of 2022. But we anticipate smaller rises than we did previously, given our downward revisions to our Treasury yield forecast, and expect most EM LC yields to decline, on net, by end-2024.

1 August 2022

More from Thomas Mathews

Global Markets Update

How changes to yield curve control might affect JGBs

We think the Bank of Japan will widen the tolerance band around its 10-year Japanese Government Bond yield target, and that the yield will consequently rise by around 25bp. But there is a clear risk of a larger and more disorderly sell-off than that. 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

15 June 2022

Global Markets Update

What to make of the decline in inflation compensation

We don’t expect long-term inflation compensation to continue to tumble, and think long-term government bond yields will bounce back before long.

26 May 2022

Capital Daily

The relationship between the US dollar and the stock market

We anticipate a renewed rally in the US dollar and further declines in US equity prices over the next twelve months or so.

24 May 2022
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