Global Markets Update Is this is the beginning of the end for low US yields? We do not believe that the recent jump in Treasury yields marks the start of a prolonged bear market. Provided, as we expect, the economic recovery ultimately disappoints and the Fed keeps short-term... 13th December 2010 · 1 min read
Global Markets Update Are Treasuries overvalued compared to US equities? Aside from this week’s fiscal stimulus proposals, one explanation being provided for the sell-off in US government bonds is that they look expensive relative to US equities. We agree, but we don’t... 9th December 2010 · 1 min read
Global Markets Update Market implications of more US fiscal stimulus The unexpected scale of the fiscal stimulus agreed by the Obama administration and Republican leaders has caught the markets off guard. We think the rally in the dollar makes sense, and that investors... 8th December 2010 · 1 min read
Global Markets Update Will common euro-zone bond issuance see the light of day? The establishment of a market for euro-zone government bonds that are guaranteed by all Member States is seen by some as an important contribution to a resolution of the region’s fiscal crisis. We are... 7th December 2010 · 1 min read
Global Markets Update Should the world care about Ireland? The significance of the crisis in Ireland and the problems in other economies on the fringes of Europe is potentially far wider than their small size would suggest. The exposure of global financial... 23rd November 2010 · 1 min read
Global Markets Update Yen to fall further against the dollar We expect the Japanese yen to weaken further against the US dollar, to 90 next year and 100 in 2012 (from around 83 today), despite a steady grind higher in most other Asian currencies. In contrast to... 18th November 2010 · 1 min read
Global Markets Update Is the Fed's QE2 already high and dry? The fact that Treasury yields have risen rather than fallen since the Fed announced the launch of QE2 is not necessarily evidence that the policy is failing, especially when the US central bank has... 15th November 2010 · 1 min read
Global Markets Update Has the US already begun a “currency war”? The first day of the G20 Summit has been overshadowed by fresh accusations that the US is deliberately engaging in a policy of weakening the dollar and that this is somehow underhand or reprehensible... 11th November 2010 · 1 min read
Global Markets Update Firms' high ROE does not justify a re-rating of US equities US nonfarm, nonfinancial companies have enjoyed a rapid increase in their return on equity (ROE). This does not, however, imply that the stock market is attractively valued. For one thing, the... 11th November 2010 · 1 min read
Global Markets Update Is the tide turning against the euro? The near 20% rise in the euro against the US dollar over the last six months has clearly not sat comfortably with our prediction back in May that the single currency would depreciate further and drop... 10th November 2010 · 1 min read
Global Markets Update QE2 is no panacea for the US stock market The US stock market’s lukewarm reaction to yesterday’s FOMC statement suggests the scale and timing of the Fed’s additional monetary stimulus have been largely, though not completely, discounted. We... 4th November 2010 · 1 min read
Global Markets Update Will QE continue to undermine the dollar? The conventional view that further quantitative easing (QE) is unambiguously negative for the dollar will be tested next week both by the outcome of the Fed meeting and by the decisions of other major... 29th October 2010 · 1 min read
Global Markets Update Oil prices to drop to $60pb in 2011 We continue to expect oil prices to fall back towards $60 per barrel (pb) by the end of next year as the dollar recovers and global demand ultimately disappoints, even though this would take them... 27th October 2010 · 1 min read
Global Markets Update What will the weaker dollar do for US corporate profits? The dollar’s slide is a welcome boost for US companies. A weaker currency not only allows exporters to gain market share and boost their margins, but also benefits those firms selling goods at home... 21st October 2010 · 1 min read
Global Markets Update Commodity super-cycle, or bubble? The recent strength in the prices of industrial metals and oil has revived talk of a “super-cycle” for these commodities where strong demand from emerging economies drives a multi-year bull market. We... 14th October 2010 · 1 min read
Global Markets Update Getting to grips with TIPS The yield on 5-year US Treasury Inflation Protected Securities (TIPS) has tumbled to a record low of minus 0.5%. It could fall even further if the yield on 5-year conventional Treasuries continues to... 13th October 2010 · 1 min read
