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The price/estimated earnings (P/E) ratio of the MSCI USA Index – a benchmark index of mid- and large-cap US equities – recently rose to its highest level since the dot-com era. Nonetheless, we still expect the index to recover a bit more ground this year, …
22nd April 2020
UK inflation probably dipped in March (07.00 BST) Turkey’s central bank likely to cut rates by 100bp, to 8.75% (12.00 BST) We think consumer confidence in the euro-zone fell even further in April (15.00 BST) Key Market Themes While the widening of the …
21st April 2020
Higher risk of default in Argentina after bondholders reject debt restructuring proposal We forecast that exports in Korea dropped by 25% in the first 20 days of April Germany’s ZEW economic sentiment index probably fell further this month (10.00 BST) Key …
20th April 2020
Strains in financial markets are continuing to ease slowly as central banks’ efforts contain the fallout from the pandemic take effect and equity markets rebound on hopes that the spread of the virus is slowing. But vulnerable sovereigns remain in the …
17th April 2020
We continue to think that most EM currencies will end the year higher than their current levels, even if they face further turbulence. But we don’t expect them to recover as strongly as they did after the GFC. As we have discussed previously , emerging …
We expect China’s official GDP to contract in Q1, for the first time in 40 years (03.00 BST) In the US, Congress is set to negotiate an extension to the SBA’s small-business loan program The UK shutdown will probably be extended until 7 th May Key Market …
16th April 2020
PBOC ramps up its monetary stimulus, and more rate cuts are on the cards US initial jobless claims will probably come in only a bit lower than the last reading UK government likely to extend lockdown to 7 th May Key Market Themes Emerging market …
15th April 2020
We think that US retail sales and industrial production fell sharply in March Korea’s Democratic Party expected to win most seats in Wednesday’s parliamentary election The Bank of Canada may add corporate bonds to its asset purchases (15.00 BST) Key …
14th April 2020
US retail sales and industrial production to show how hard consumer spending has been hit We expect central banks in Indonesia and Peru to cut rates (Tue. & Fri.) China’s GDP may have fallen by as much as 16% y/y in Q1 (Fri.) Key Market Themes We have …
9th April 2020
If, as we expect, the global economy starts to recover in the second half of the year, the yields of core government bonds are likely to rebound a bit further. But we think that weak inflation and continued ultra-loose monetary policy will keep yields at …
We think that the earnings of firms in the MSCI EM Index will fall sharply this year as the coronavirus pandemic reduces world trade by a fifth and commodity prices only recover slightly. But with much of this outcome probably already discounted, we think …
8th April 2020
Congress is reportedly considering expanding support to small businesses US consumer confidence index likely to show its biggest ever fall in April (15.00 BST) We expect Korea’s central bank to cut its policy rate to an all-time low of 0.50% Key Market …
Eurogroup seems set to agree a joint fiscal response to the coronavirus crisis We expect the Polish central bank to cut its policy rate by 50bp to 0.50% We think Norway’s headline inflation fell from 0.9% to about 0.6% in March (09.00 BST) Key Market …
7th April 2020
Although the valuation of the overall MSCI Emerging Markets (EM) Index is not unusually low, EM equities outside Asia and in some “cyclical” sectors now appear quite attractively valued by past standards. As in the case of developed market (DM) equities, …
Eurogroup set to discuss the use of the ESM in response to the coronavirus crisis We expect the RBA to keep its policy rate unchanged at 0.25% (05.30 BST) Mexico’s headline inflation likely to have fallen from 3.7% to 3.5% in March (12.00 BST) Key Market …
6th April 2020
Strains in the financial system appear to have eased a little over the past week or so, as policymakers continue to roll out new support measures. Our view remains that while central banks can probably prevent the pandemic from morphing into a full-blown …
3rd April 2020
US initial claims data likely to point to another 5 million job losses this week (Thursday) We think that US consumer confidence dropped to levels last seen during the GFC (Thursday) Interest rates likely to be cut in Korea and Poland, but left unchanged …
PMIs in the euro-zone and the UK likely to be revised down from their flash estimates US non-farm payrolls unlikely to capture much of the hit to employment from coronavirus ISM non-manufacturing index could prove a more useful gauge of the effect on US …
2nd April 2020
Although analysts’ expectations for corporate earnings have been revised down quite significantly since the coronavirus began to spread around the world, stock prices suggest that investors are braced for an even worse outcome. With that in mind, we think …
We forecast that the credit spreads of euro-zone peripheral bonds will fall back further this year and remain low in 2021 thanks to unwavering support from the ECB. But public finances will be deteriorating, especially in Italy, which raises the risk of a …
While the coronavirus epidemic will probably weigh on the US economy much beyond the end of this year, we suspect that the S&P 500 will start recovering in the second half of 2020. According to the NBER’s Business Cycle Dating Committee, there have been …
1st April 2020
US initial jobless claim may have surged to 5 million last week (13.30 GMT) India’s manufacturing PMI probably plunged in March (05.00 GMT) We expect Egypt’s central bank to cut its deposit rate by 100bp (18.00 GMT) Key Market Themes Although both …
While the worst may be yet to come for emerging market currencies, we expect that most will end this year stronger than they are now. Emerging market currencies have had a difficult year so far : our equal-weighted index of twenty large EM currencies has …
China’s Caixin manufacturing PMI probably rebounded in March (01.45 GMT) ADP employment data to give more insight on the state of the US labour market (13.15 GMT) We expect a sharp fall in the US ISM manufacturing index in March (15.00 GMT) Key Market …
31st March 2020
China’s PMIs are likely to show that activity started to recover in March (01.00 GMT) Germany’s unemployment rate probably rose to a 20-month high of 5.2% in March (8.55 GMT) We expect the central bank of Chile to lower its policy rate by 50bp to 0.5% …
30th March 2020
In our view, global equities are not as “cheap” as the recent falls in price/earnings ratios seem to suggest. That is because earnings expectations are likely to be revised down much further as the crisis unfolds. Although the selling pressure in stock …
27th March 2020
Track the spread of COVID-19 and its economic impact on our dedicated page here We think that manufacturing output recovered in China in March, but plunged elsewhere Huge policy response won’t prevent economic activity from falling sharply in Q2 Key …
ECB will not be bound by issuer limits in its Pandemic Emergency Purchase Programme EU leaders to hold press conference on joint fiscal response to the crisis later on Thursday US $2tn coronavirus relief bill likely to be passed by the House on Friday Key …
26th March 2020
EU leaders set to discuss the use of “corona bonds” to fund the fiscal response to COVID-19 Singapore’s advanced estimate of Q1 GDP is likely to show a slump in activity (00.00 GMT) We expect the Czech central bank to cut its policy rate by 75bp to 1.00% …
25th March 2020
Although we think that continued support from policymakers will prevent a financial system meltdown that would amplify the economic shock from the coronavirus pandemic, tensions in markets are likely to remain significant until there are signs that the …
While we think that most currencies will eventually regain much of the ground that they have recently lost to the US dollar, we don’t expect that process to start until the pandemic has clearly passed its worst . The US dollar has strengthened this year …
24th March 2020
Track the spread of COVID-19 and its economic impact on our dedicated page here Flash PMIs should show the huge scale of the economic damage caused by the outbreak More central banks likely to loosen monetary policy after Fed announces raft of new …
23rd March 2020
The slump in the prices of commodities has hit hard the currencies of the countries whose fortunes depend heavily on them. (See Chart 1.) But if we are right and commodity prices eventually recover as the coronavirus pandemic is brought under control, …
Our view remains that, despite policymakers’ best efforts, a sustained turnaround in equity markets will only come once the virus starts to fade. That hasn’t happened yet. So, we suspect that they will fall a bit further in the coming months, despite …
20th March 2020
Many central banks have eased policy further, and more loosening appears to be on the cards We think that China’s 1-Year Loan Prime Rate fell by another 10bps this month (01.30 GMT) US senators to release details of stimulus plan to fight the coronavirus …
19th March 2020
Despite their latest fiscal measures, we think that euro-zone policymakers need to do more US data for March may show early signs of the economic hit from the virus (12.30 GMT) Switzerland’s central bank is likely to cut its policy rate by 25bp to -1.00% …
18th March 2020
The turmoil in financial markets caused by the global spread of COVID-19 shows little sign of abating, despite policymakers’ efforts to contain the fallout. Our view remains that until evidence emerges that the spread of the virus is slowing down, risky …
17th March 2020
More central banks to join the Fed in loosening monetary policy You can track the spread of COVID-19 and its impact on our dedicated page here US NAHB homebuilder confidence index should give some idea of the hit to housing activity Key Market Themes The …
16th March 2020
Judging by the bear markets of the past fifty years or so (see here ), the valuation of the US stock market can make a big difference to how far it falls and how long it takes before it reaches a floor. With that in mind, this note fleshes out what role …
13th March 2020
FOMC likely to cut rates by 50bp, but 100bp possible (Wednesday) We think that the Bank of Japan will cut its deposit rate to minus 0.2% (Thursday) A fall in the real means Brazil’s central bank is likely to stand pat (Wednesday) Key Market Themes …
Global markets rout deepens as fears over the economic impact of pandemic mount The UK is expected to move from a “contain” to a “delay” strategy for countering COVID-19 University of Michigan survey to show how the virus is weighing on US consumer …
12th March 2020
While some of the large shifts in the FX market over the past weeks may unwind if the coronavirus epidemic fades, we have revised some of our forecasts to reflect the sharp fall in US interest rates and the price of oil. Before the global spread of the …
We expect the ECB to announce new stimulus, including a 10bp rate cut (12.45 GMT) India’s CPI inflation is likely to have dropped sharply in February (12.30 GMT) Peru’s central bank will probably lower its policy rate to 2% (23.20 GMT) Key Market Themes …
11th March 2020
Although the US high-yield credit spread soared on Monday to its highest level in nearly four years, we don’t think that the US economy is bound to plunge into another deep recession. Not surprisingly, the surge in the option-adjusted spread (OAS) of ICE …
10th March 2020
Financial market meltdown raises the probability of more Fed easing before long … … but falls in MXN and RUB have all but removed the possibility of cuts in Mexico and Russia See our dedicated page for all the latest on the coronavirus outbreak Key Market …
9th March 2020
The UK budget will probably deliver measures to cushion the economic effects of COVID-19 We think that the ECB will follow the Fed and cut its deposit rate by 10bp (Thursday) University of Michigan survey to show that COVID-19 is weighing on US consumer …
6th March 2020
If, as we expect, worst fears about the coronavirus outbreak don’t materialise, global stock markets will probably generally recover. However, we doubt that this will be the case for equities in Emerging Asia, which feeds into our view that MCSI’s EM …
You can track the latest data on the coronavirus on this dedicated page on our website We think that US non-farm payrolls increased by 230,000 in February (13.30 GMT) The US trade deficit probably narrowed in January (13.30 GMT) Key Market Themes Despite …
5th March 2020
Given the rapid spread of the coronavirus and the Fed’s emergency rate cut, we are revising down our end-2020 forecast for the US 10-year Treasury yield from 2% to 1.25%. The continued increase in new virus cases across the world suggests that the …
4th March 2020
We now expect more rate cuts from the Fed , the ECB , the BoJ and the BoE OPEC+ likely to agree to cut oil output further in order to support prices We think that Australia’s trade surplus narrowed in January (00.30 GMT) Key Market Themes In an otherwise …
