Global Markets Update Is the CAPE signalling a bubble in US equities? The fact that the valuation of the US stock market is already high compared to its long-run averages on the cyclically-adjusted price/earnings (CAPE) measure is a good reason to be wary of forecasting... 6th January 2014 · 1 min read
Global Markets Update Fed decision no turning point for markets Although the timing of the Fed’s decision to taper its asset purchases came as surprise to the majority (although not to us), the announcement has not proved so far to be the turning point for markets... 19th December 2013 · 1 min read
Global Markets Update Prospect of Fed tapering prompts some capital flight Investors in emerging market assets clearly remain concerned about the consequences of a tapering of the Fed’s asset purchases. EPFR Global data reveal that there were net ETF and mutual fund... 17th December 2013 · 1 min read
Global Markets Update FTSE 100 to outperform next year Developed market equities have been one of the top-performing asset classes so far this year, but the UK’s FTSE 100 index has lagged well behind its peers. We think a weaker pound and a cyclical... 12th December 2013 · 1 min read
Global Markets Update New forecasts for emerging market bonds and equities We have revised some of our key forecasts for emerging market (EM) bonds and equities. On average, we now expect larger increases in credit spreads and smaller gains in stock prices than before. Our... 11th December 2013 · 1 min read
Global Markets Update What would the Fed taper mean for government bonds? Fears that the end of the Fed’s purchases will lead to a further surge in Treasury yields are almost certainly overdone. What’s more, even if long-term interest rates do continue to climb in the US... 9th December 2013 · 1 min read
Global Markets Update Will sterling’s strength be sustained? Sterling has been the best performing major currency in recent months, rising from $1.50 in the summer to $1.63 now. Nonetheless, we expect it to come under pressure again before too long and... 5th December 2013 · 1 min read
Global Markets Update Aussie dollar likely to come under further pressure The Australian dollar was the second-worst performing of the G-10 currencies in November behind the Japanese yen, shedding nearly 4% of its value against the US dollar. We expect the Aussie to remain... 3rd December 2013 · 1 min read
Global Markets Update What impact would RMB liberalisation have on Treasuries? The People’s Bank of China (PBC) recently asserted that its intervention in the currency market would “basically” end. If this proves to be the case, it would represent a significant change of heart... 27th November 2013 · 1 min read
Global Markets Update Does the low valuation of UK equities make them appealing? At first glance the UK stock market still appears to be attractively valued, despite a double-digit price rise so far this year. But its valuation has been flattered by strong earnings growth in... 26th November 2013 · 1 min read
Global Markets Update Is slowing globalisation a threat to the US stock market? Labour’s share of income has plummeted in the United States during the past decade. This has provided an important prop to the stock market because its flipside has been a surge in the share of income... 21st November 2013 · 1 min read
Global Markets Update Bonds continue to be shunned EPFR Global data reveal that ETF and mutual fund portfolio flows into emerging market (EM) bonds were negative in October for the fifth month running. By contrast, flows into EM equities were... 20th November 2013 · 1 min read
Global Markets Update More downside for yen and upside for Japanese equities The Nikkei closed back above 15,000 today, helped by a renewed decline in the yen past 100 to the dollar. We expect Japanese equities to advance further and the currency to continue to weaken, due... 15th November 2013 · 1 min read
Global Markets Update Will rising corporate bond yields put pressure on US equities? The earnings yield of a stock market index should be closely related to the average real yield of long-dated bonds issued by its constituents. In the US, we think the latter is likely to rise... 13th November 2013 · 1 min read
Global Markets Update Market implications of a shift in the Fed’s financial repression There is growing speculation that when the Fed eventually announces a tapering of its asset purchases, it will simultaneously lower its unemployment rate threshold. A commitment to keep rates lower... 11th November 2013 · 1 min read
Global Markets Update Will the Fed taper be a game-changer? The question of exactly when the US Fed will start to taper its asset purchases under QE3 has understandably been the focus of much analysis and speculation (including by ourselves). There are six... 5th November 2013 · 1 min read
