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While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
13th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
President Trump’s recent suggestion that he may yet ratchet US tariffs higher highlights how much uncertainty there still is around both where tariff rates will eventually settle and the US policy outlook more broadly. That said, our sense is that markets …
12th June 2025
Colombia’s fiscal problems have returned to the spotlight amid rumours that the government will suspend the fiscal rule. This has triggered a sell-off in the bond market, but it doesn’t look like the deterioration in the fiscal situation has been fully …
10th June 2025
India’s stock market has fared well this quarter, outperforming other emerging market equities in aggregate, but we doubt this bout of outperformance will last in the near term. The good times seem to be back for India’s stock market, after a few months …
5th June 2025
Most emerging market equities have held up surprisingly well of late, and in fact broadly outperformed global equities. But we think further outperformance is unlikely, especially for commodity exporters. Emerging market (EM) equities have been remarkably …
30th May 2025
We’re nudging up our forecasts for equities in most non-US developed markets, partly in response to our upwardly revised projections for the S&P 500 . But we still think they’ll lag equities in the US, if perhaps less significantly than they did earlier …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
The recent substantial volatility in global sovereign bond markets hasn’t altered our view that in most cases 10-year government bond yields will end this year near, or below, their current levels. We also think corporate bonds will continue to do quite …
Despite the latest setback in the S&P 500, we are revising back up our end-2025 forecast for the index in response to the de-escalation of the trade war albeit to a lower level of 6,250 than the projection of 7,000 we had before “Liberation Day”. We are …
22nd May 2025
One month on from the peak of the post-“Liberation Day” market turmoil, calm has largely returned and most key asset markets have recovered much, or all, of the ground lost in the days following 2 nd April. Indeed, core money markets never looked …
15th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. European markets have had a strong start to the year, and we are …
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
We don’t foresee further common-currency outperformance of MSCI’s UK Index vis-à-vis its USA Index, which has largely been a function of their compositions and the strength of cable since Donald Trump’s return to the White House . This is because we …
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Even though the 10-year Treasury yield is close to where it was before “Liberation Day”, measures of term premia remain elevated. At face value, that suggests that the yield could fall quite a bit further, but we suspect any unwind of the recent increase …
8th May 2025
Paul Samuelson famously quipped in 1966 that the stock market had predicted nine of the last five recessions in the US. We suspect it just sent another false signal about an economic downturn. We can quibble over whether we just had a bear market. On a …
2nd May 2025
Although the Liberals have just missed out on a majority, Prime Minister Mark Carney should still be able to implement his fiscal plans with support from the NDP or Bloc Québécois. If anything, the need to grant concessions to those parties means fiscal …
29th April 2025
The trade war has merely delayed rather than scuppered further policy tightening by the Bank of Japan. Accordingly, we’re sticking to our forecast that the 10-year JGB yield will rise to 1.75% by year-end. Whereas the 10-year US Treasury yield has on net …
10th April 2025
Korea’s Constitutional Court upheld President Yoon’s impeachment today which should ease concerns around Korea’s institutional frameworks. With fresh presidential elections now set to occur soon, there is a chance that fiscal policy will be loosened but …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
We are significantly downgrading our end-2025 forecast for the S&P 500 for two key reasons. The first is yesterday’s announcement of greater tariffs on US imports than we had assumed . In such circumstances, we no longer think the economic backdrop will …
Given our view that the rise in yields outside Germany will not match the recent increase in Bund yields anytime soon, we are revising down our forecasts for euro-zone spreads. That said, we still expect spreads in France, Italy, and Belgium to widen due …
28th March 2025
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
While US equity outperformance could reassert itself in the near term if concerns about US growth waned and enthusiasm about AI returned, we suspect that the longer-run story is brighter for equities elsewhere. US equity exceptionalism is under pressure. …
25th March 2025
While a notable shift in Canadian fiscal policy is likely regardless of who wins the upcoming election, we doubt this will move the needle for the loonie or Canadian government bonds, given that the outlook for Canadian financial markets depends more on …
18th March 2025
Lingering fiscal risks in South Africa, alongside the challenging global backdrop, prompt us to expect a dim outlook for the country’s bonds, equities and the rand over the rest of this year. The negative reaction in markets to rumours that South Africa’s …
The unravelling of US exceptionalism in stock markets since Donald Trump returned to the White House on 20 th January has been mainly driven by concerns about the US’ dominance of AI and the relative health of its economy (which has also dragged down …
6th March 2025
In this Update , we put into context the recent surges in Bund yields, German equities, and the euro that have been triggered by expectations of a significant loosening of fiscal policy in Europe’s biggest economy. We have discussed here the economic …
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
The near-term picture for China’s equities looks brighter than we’d previously thought, and we’re revising up our forecasts for them significantly. But, we still think they will underperform those in the US, for example, over the remainder of 2025. …
28th February 2025
Notwithstanding recent setbacks, we continue to think that this year will see a major rally in US equity markets, higher Treasury yields, and a stronger dollar. Many of the key trends in financial markets in the run-up to and immediate aftermath of the US …
27th February 2025
Germany’s next government looks set to cut taxes and, if the parliamentary maths allow, reform the constitutional fiscal rule. It is also likely to be firmer in its support for Ukraine even as support from the US wanes and to advocate an increase in EU …
20th February 2025
While our bullish year-end forecast of 7,000 for the S&P 500 assumes the index’s absolute valuation will approach its dotcom-era peak, that forecast is comparatively conservative based on relative valuation. If the equity risk premium reached its level in …
We doubt that Donald Trump’s reciprocal tariff threat, nor his broader protectionist agenda, are priced in markets fully. We expect US Treasury yields and the dollar to edge up as these tariffs come into effect. In our view, this, alongside continued …
18th February 2025
Our base case is that Treasury term premia – and yields – rise only a little further. But we think disruptive US trade policy, among other things, poses a threat to that view and, relatedly, to Treasuries’ broader use as a hedge against any downturns in …
14th February 2025
A slowdown in the economy, alongside an unfavourable external environment, have contributed to declines in the Indian stock market and the rupee. We continue to expect the stock market to fall further and we now expect a further decline for the Indian …
12th February 2025
We expect equities in Germany to underperform those in other major developed markets in the coming year or so because German firms are more exposed to the increase in protectionism which appears to be gathering pace. This will probably be more important …
11th February 2025
The UK stock market appears to be riding high – the FTSE 100 has hit a record high. But local-currency returns from UK equities have been flattered by a weaker pound. In common-currency terms, UK stocks have performed much less impressively, and we expect …
6th February 2025
Despite Donald Trump cutting deals with Mexico and Canada, we are not backtracking from our revised view that the Fed will stay on the sidelines for the next six months. (See here .) What’s more, if US tariffs end up close to our assumptions, we think the …
Notwithstanding negative FX returns and a challenging external backdrop brought about by Donald Trump’s agenda, we think Turkish bonds and equities will continue to perform relatively well in 2025, as the continuation of orthodox policymaking in Turkey …
5th February 2025
US bank stocks in the S&P 500 have generally outperformed their peers over the past year and the key factors driving this look set to persist in 2025. So, we think they will remain around the front of the pack. The S&P 500 Banks Index enjoyed a strong …
28th January 2025
We forecast bond yields to fall over the rest of 2025 in Germany, the UK, and New Zealand, even though we think the relief rally in US Treasuries is over. And we anticipate yields to rise in Japan. The global sell-off in bonds seems to have paused. Bonds …
24th January 2025
The “America First Trade Policy” White House memorandum makes it clear that tariffs are coming, although we still have little clarity on the timing. There are some signs that a universal tariff could come later than in the second quarter as we have …
21st January 2025
We think Treasury yields will fall over the remainder of this year, but that the yield curve could nonetheless continue to steepen. The sell-off in Treasuries has gone into reverse in the back half of this week, as the December CPI print seemingly …
17th January 2025
We think China’s 10-year government bond yield will fall to fresh record lows over the coming year, partly because the other investment options available to Chinese investors look increasingly unappealing. Chinese government bond yields are around record …
16th January 2025
If sustained, rising bond yields add to downside risks to economic growth. The potential direct effects on real activity are greatest in the US. But higher yields in other DMs could limit how far borrowing costs in the private sector fall and force the …
15th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
Investors’ enthusiasm for AI appears to have supported an increasingly broad set of equities of late, even if much of the associated rise in market capitalisation remains concentrated in a few of the largest firms. In August we noted that investors had …
10th December 2024
