Global Markets Update Has the US equity risk premium reached a peak? Part of the justification provided in some quarters for the recent rise in the US stock market is that equities are attractively valued relative to bonds. We do not dispute this fact – the equity risk... 16th February 2012 · 1 min read
Global Markets Update Gilts unimpressed by £50bn more QE, but outlook still rosy Gilt yields bounced on Thursday after the UK MPC announced a £50bn planned increase in the size of its Asset Purchase Programme (APP) to £325bn. While this presumably reflected disappointment in some... 9th February 2012 · 1 min read
Global Markets Update Too soon to call the end of the bull market in Treasuries Reduced fears of a meltdown in the euro-zone and the recent run of better economic data – culminating in January’s unequivocally strong US payrolls report – have led to speculation that the long bull... 6th February 2012 · 1 min read
Global Markets Update US Treasuries to benefit from more than just Fed policy The relatively subdued response of US Treasuries to the outcome of Wednesday’s FOMC meeting underlines the fact that while monetary policy should provide a firm anchor for long-term yields over the... 26th January 2012 · 1 min read
Global Markets Update A deepening liquidity trap would be bad news for equities Writing in today’s Financial Times, Gavyn Davies argues that “nominal equity returns may be held back by low inflation but in real terms they should outperform government bonds, even if the liquidity... 25th January 2012 · 1 min read
Global Markets Update What next for the euro? The euro fell below $1.27 against the dollar again on Wednesday – close to its lowest level since the autumn of 2010. We do not think its slide is over. Both the relative prospects for monetary policy... 11th January 2012 · 1 min read
Global Markets Update US stock market at risk from the earnings cycle The fourth quarter US corporate earnings season kicks off today. The reporting season is unlikely to be especially upbeat as the profits cycle is now peaking. Looking ahead, the growth rate of profits... 9th January 2012 · 1 min read
Global Markets Update How much difference will the Fed's rate forecasts make? The US Fed’s decision to start to publish forecasts for its key official interest rate could be another useful policy tool to keep long-term interest rates low, even though that is not the stated... 4th January 2012 · 1 min read
Global Economics Update Two painful lessons for commodity investors from 2011 This year’s sizeable falls in most commodity prices have highlighted two points that have actually been clear for much longer but are still not yet acknowledged by many commentators. First, even if... 20th December 2011 · 1 min read
Global Markets Update 2012 should be another disappointing year for US equities The US stock market is ending 2011 with a whimper. The S&P 500 has fallen so far in December, and is fairly close to our year-end target of 1,200. While we do not expect equity prices to collapse next... 20th December 2011 · 1 min read
Global Markets Update Bond market implications of future economic divergence The US and European business cycles have become highly synchronised in recent decades. But this does not preclude significant economic divergence in response to major structural events. The last of... 6th December 2011 · 1 min read
Global Markets Update The future still looks bright for US Treasuries The sharp drop in the US unemployment rate reported on Friday barely ruffled Treasuries. A few more months of such rosy news on the labour market would probably elicit a less sanguine response in the... 5th December 2011 · 1 min read
Global Markets Update New market forecasts - the fall-out from an EMU break-up We have reviewed our key market forecasts in light of a change to our assumption about the timing of an EMU break-up. The new numbers are presented in the table on the next page. There are four main... 30th November 2011 · 1 min read
Global Markets Update Catch-22 for German Bunds Germany is caught between a rock and a hard place. If she rides to the rescue of her neighbours, she will undermine her own credit standing. If she chooses not to, the euro-zone will probably collapse... 24th November 2011 · 1 min read
Global Markets Update Worse to come for “core” euro-zone bonds? The yields on government bonds issued by France, Austria, Belgium and the Netherlands have risen sharply in recent weeks in a worrying sign that the euro-zone’s debt crisis is starting to rot its... 21st November 2011 · 1 min read
Global Markets Update What to make of Greece’s bigger “haircut” Details have begun to emerge of the revised debt exchange proposed for Greece. The good news is that a larger haircut will make her debt more manageable, all else equal. The bad news is that all else... 16th November 2011 · 1 min read
