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The profits of Corporate America have shrunk during the past four years according to revised estimates recently published by the US Bureau of Economic Analysis (BEA). By contrast, S&P 500 operating earnings per share (EPS) have grown by nearly 50%. …
5th August 2019
Unlike in Australia, interest rates are likely to be cut in New Zealand We think that GDP growth in the UK stagnated in Q2 (Friday) We expect the US ISM non-manufacturing index to have edged higher in July (Friday) Key Market Themes The rally in US …
2nd August 2019
The strong performance of both equities and government bonds this year reflects a view that monetary easing will put the global economy back on track very soon – an outlook that seems too benign to us. Central banks around the world are likely to loosen …
1st August 2019
The recent rally in frontier sovereign dollar bonds is unlikely to be sustained (see Chart 1) and we expect spreads to widen in Argentina, Ukraine and parts of the Middle East. We have raised concerns before about weak balance sheets in Bahrain and Oman. …
30th July 2019
We think that euro-zone core inflation fell in July, and GDP growth slowed in Q2 (10.00 BST) The FOMC will probably cut its target range for the federal funds rate by 25bp (19.00 BST) Brazil’s central bank is also likely to lower its main policy rate at …
We expect the Bank of Japan to extend its forward guidance to summer 2020 or beyond Euro-zone ESI is likely to have fallen to about 102.0 in July (10.00 BST) US personal spending probably rose by about 0.3% in June. (13.30 BST) Key Market Themes The yield …
29th July 2019
The Swiss franc has been the best performing G10 currency over the past three months, despite falling back a bit after the ECB meeting on Thursday. We think that monetary policy as well as safe-haven flows will continue to support it against the euro …
26th July 2019
We think that the ECB will cut rates in September and restart net asset purchases shortly after The central bank of Russia will probably cut its policy rate by 25bp to 7.25% (11.30 BST) US GDP growth probably fell quite sharply in the second quarter …
25th July 2019
Judging by their recent performance, more bad news is priced into German than US equities. As a result, if we are right and risky assets around the world come under pressure as global growth slows further, we suspect that the German stock market will fall …
24th July 2019
Incoming UK Prime Minister Johnson to reveal his Brexit plans in acceptance speech We think that July’s PMIs remained consistent with a sharp slowdown in growth in the US … … and with subdued growth in the euro-zone Key Market Themes There was little …
23rd July 2019
Boris Johnson is likely to win the UK Conservative Party leadership election We expect interest rates to be cut by 50bp in Nigeria, but remain on hold in Hungary Euro-zone consumer confidence probably edged up in June (16.00 BST) Key Market Themes While …
22nd July 2019
We think that Japan’s headline CPI inflation dropped to 0.6% y/y in June (00.30 BST) Canada’s retail sales are likely to have edged up in May (13.30 BST) University of Michigan US consumer confidence index probably rose a bit in July (15.00 BST) Key …
18th July 2019
Emerging market (EM) equities have continued to recover from their sharp falls in May, but we do not think that they are out of the woods this year. Expectations for EM corporate earnings seem to be based on assumptions about the outlook for the global …
17th July 2019
We expect central banks in South Africa, Indonesia and Korea to cut their policy rates Annual growth in Japan’s exports and imports probably remained negative (00.50 BST) The Teranet index is likely to show that Canada’s house price inflation fell further …
While we think that the twists and turns of the UK’s journey out of the European Union will have a bearing on Gilts and sterling, that won’t be the only factor driving them. What’s more, we doubt that Brexit will matter much for UK equities. There are …
UK CPI inflation was probably unchanged at 2.0% y/y last month (09.30 BST) We think that the euro-zone inflation rate for June will be revised upwards (10.00 BST) End of plant shutdowns probably supported Canada’s manufacturing sales in May (13.30 BST) …
16th July 2019
While we are lowering our end-2019 and end-2020 forecasts for the 10-year BTP yield, we remain pessimistic about the near-term prospects for government bonds in Italy. Back in January, when the yield of 10-year Italian government bonds (BTPs) was roughly …
15th July 2019
We think that there is very little, or no, scope for rate expectations and bond yields to renew their downward trend in most economies, given how far they had already tumbled before their recent rebound. The dark blue bars in Chart 1 show how investors …
12th July 2019
Key Market Themes We think that China’s economy lost further momentum in Q2 (Monday) Weather-related disruptions probably weighed on US industrial output in June (Tuesday) Japan’s exports and imports are likely to have fallen in June (Thursday) Since oil …
China’s export and import growth probably remained weak in June Rebound in euro-zone industrial production unlikely to offset fully April’s fall (10.00 BST) US core producer price inflation may have been boosted by the increase in tariffs (13.30 BST) Key …
11th July 2019
Fed minutes from June meeting are likely to take a back seat after Powell’ testimony We think that Sweden’s inflation fell below 2% last month (08.30 BST) US core consumer prices probably picked up in June (13.30 BST) Key Market Themes Today’s strong hint …
10th July 2019
UK MPs to launch fresh bid to stop next PM forcing through a “no-deal” Brexit Japan’s wage growth data continue to be distorted by change in methodology (00.30 BST) Powell could provide clarity on possible July rate cut at the Boston Fed conference Key …
8th July 2019
Fed Chair might provide clarity on rate cut prospects in semi-annual testimony (Wednesday) US inflation may have been boosted in June by the increase in tariffs on Chinese goods We think that euro-zone industrial production edged up in May (Friday) Key …
5th July 2019
Christine Lagarde’s nomination as ECB President makes us even more optimistic about the near-term outlook for government bonds in the euro-zone and reinforces our view that corporate bonds there will hold up better than elsewhere. We have argued for some …
We estimate that US non-farm payroll employment rose by 125,000 in June … (13.30 BST) … and think that wages rose by about 0.3% m/m (13.30 BST) Canada’s employment probably increased by only 10,000 last month (13.30 BST) Key Market Themes We doubt that …
4th July 2019
We think that inflation in Switzerland moved closer to zero in June (07.30 BST) Euro-zone retail sales are unlikely to have rebounded in May (10.00 BST) The National Bank of Romania will probably leave its policy rate at 2.50% (13.00 BST) Key Market …
3rd July 2019
While the real returns from a wide variety of assets were positive in the first half of this year, we don’t expect the good news to last. We project that those from US equities and government bonds, for example, will both be negative in the second half of …
We think that Turkey’s CPI inflation fell sharply last month (08.00 BST) The US ISM non-manufacturing index probably dropped back in June (15.00 BST) The central banks of Sweden and Poland are likely to leave their policy rates unchanged Key Market Themes …
2nd July 2019
European Commission unlikely to recommend formal disciplinary action against Italy We expect the Reserve Bank of Australia to cut its policy rate to 1.00% (05.30 BST) Brazil’s monthly industrial production growth was probably quite weak in May (13.00 BST) …
1st July 2019
China’s Caixin manufacturing PMI probably edged lower in June (Monday) The RBA is likely to cut its policy rate to 1.00% (Tuesday) We estimate that US non-farm payroll employment rose by 125,000 in June (Friday) Key Market Themes Another trade truce at …
28th June 2019
We have long forecast the yen to strengthen to ¥105/$ by the end of 2019, primarily based on our expectation that a sell-off in global equities would boost the demand for safe havens. While we remain of this view, the policy stance of the Bank of Japan …
Frontier financial markets have made gains over the past month, but have generally underperformed their emerging market counterparts. The performance of equity markets has been mixed. And currencies in most cases have only edged up against the dollar. …
27th June 2019
We estimate that Japan’s industrial production increased by 1.8% m/m in May (00.50 BST) Switzerland’s KOF Economic Barometer index probably rose in June (08.00 BST) US personal spending data are likely to point to rising consumption growth (13.30 BST) Key …
While the performance of the US stock market in the Fed’s last four easing cycles was varied, our view remains that it will fall in the next one, which we expect to span from late-summer 2019 to spring 2020. The S&P 500 soared by nearly 15% in the …
Japan’s retail sales values probably rebounded in May (00.50 BST) We think that economic sentiment in the euro-zone remained subdued (10.00 BST) Mexico’s central bank is likely to stand pat for now (19.00 BST) Key Market Themes Unlike most other G10 …
26th June 2019
Fed Chair Jerome Powell due to speak about monetary policy (Tuesday) We expect the RBNZ to stand pat this week, but cut its policy rate later this year (03.00 BST) We think that US durable goods orders fell sharply in June (13.30 BST) Key Market Themes …
25th June 2019
We think that Hungary’s central bank will raise its overnight deposit rate (13.00 BST) US Conference Board consumer confidence index probably fell back in June (15.00 BST) Fed Chair Jerome Powell’s CFR interview might give details about dovish shift …
24th June 2019
This report is only available as a PDF. Click to download. … Market reaction to US-Iran tensions likely to remain contained …
21st June 2019
Although we expect the FOMC to loosen policy substantially by the spring of 2020, we are not forecasting a renewed decline in the 10-year Treasury yield to below 2%. This is because we think that the Committee will cut its target for the federal funds …
This report is only available as a PDF. Click to download. … We don’t expect the rallies in Treasuries, JGBs and Gilts to last …
20th June 2019
This report is only available as a PDF. Click to download. … Investors hoping for unlikely mix of rate cuts and strong earnings …
19th June 2019
Hopes that much looser monetary policy, particularly in the US, will prevent more weakness in the global economy have supported emerging market (EM) assets recently, but we doubt that this will last. … Monetary easing unlikely to drive a sustained …
This report is only available as a PDF. Click to download. … Waning appetite for risk likely to weigh on the euro in 2019 …
18th June 2019
This report is only available as a PDF. Click to download. … What to make of the plunge in Treasury inflation compensation …
17th June 2019
This report is only available as a PDF. Click to download. … Inflation compensation can fall further even if oil stabilises …
14th June 2019
Investors are now even more dovish that we have long been about the outlook for monetary policy in the US. As such, we doubt that Treasury yields will drop further. However, we don’t expect looser monetary policy to avert a drop in global stock markets. … …
This report is only available as a PDF. Click to download. … Protests far from the biggest threat to HK equities …
13th June 2019
Investors seem as pessimistic about the US-China trade war now as they have ever been. Indeed, it would probably come as little surprise to markets if the two sides imposed tariffs on virtually all bilateral goods trade, as we now think is likely. But our …
Donald Trump’s assertion on Twitter yesterday that a “way too high” Fed interest rate was responsible for a “devalued” euro and other currencies against the dollar is wrong, at least when it comes to the ongoing rise of the greenback since the autumn. For …
12th June 2019
This report is only available as a PDF. Click to download. … Bund yields likely to stay low for longer than in 2016 …
