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After failing to live up to its own hype last week, we would not be surprised if the ECB is forced to increase its monthly asset purchases after all next year. But even if it does, we think that the yields of longer-dated German Bunds will edge higher. … …
11th December 2015
This report is only available as a PDF. Click to download. … South African markets likely to remain weak …
10th December 2015
Most emerging market (EM) asset classes have underperformed their peers in developed markets so far this year. Plenty of downside risks remain going into 2016, but we continue to think that EM markets will perform reasonably well in the months ahead. … …
9th December 2015
This report is only available as a PDF. Click to download. … Broad-based squeeze on margins to weigh on the US stock market …
This report is only available as a PDF. Click to download. … Will the slump in emerging market equities reverse? …
8th December 2015
The renewed slump in emerging market (EM) equities perhaps calls into question our view that they will perform well in 2016/17. But the latest declines have been driven by a fall in commodity prices and more disappointing news from China, neither of which …
The broad-based strength of the last two US employment reports has seen investors reassess the outlook for US monetary policy. Investors now expect the federal funds rate to rise at a faster pace than they did one month ago, which has underpinned the rise …
7th December 2015
This report is only available as a PDF. Click to download. … How will the US corporate bond market handle Fed tightening? …
This report is only available as a PDF. Click to download. … The outlook for US Treasuries remains poor …
4th December 2015
Today’s US Employment Report bolsters our view that the future stance of Fed policy will put upward pressure on Treasury yields over the next couple of years. … US Treasuries remain exposed to tighter Fed …
This report is only available as a PDF. Click to download. … Oil price could jump if OPEC fails to accommodate Indonesia …
3rd December 2015
This report is only available as a PDF. Click to download. … How might markets react to further ECB easing? …
2nd December 2015
Fed tightening may dampen demand for emerging market (EM) dollar-denominated government bonds in the next couple of years, but with spreads over US Treasuries already high we do not expect a major sell-off. … Dollar-denominated bonds primed for …
This report is only available as a PDF. Click to download. … What next for India’s bond market? …
1st December 2015
This report is only available as a PDF. Click to download. … Is the rally in German Bunds on borrowed time? …
30th November 2015
This report is only available as a PDF. Click to download. … Are low JGB yields here to stay? …
27th November 2015
This report is only available as a PDF. Click to download. … Will a stronger dollar derail the US stock market? …
26th November 2015
US high-yield corporate bonds have performed poorly in November amid concerns over the renewed fall in commodity prices and the prospect of tighter US monetary policy. Looking ahead, we do not think that this performance will continue, even if the Fed …
25th November 2015
Being long of the dollar is reportedly one of the most crowded trades in the market. However, we stillthink that the US currency has further to climb against other majors. Indeed, we now expect the euro tofall below parity no later than the middle of next …
This report is only available as a PDF. Click to download. … Euro to fall to parity, and beyond …
Some claim that the US stock market is heading for a collapse because they assume that its price/earnings ratio will inevitably plummet to its long-run average. This assumption is wrong if, as seems highly likely, investors’ required real return on equity …
Unlike in developed markets, interest rate differentials are not a particularly good guide to currency movements in emerging markets (EMs). Accordingly, while there will be bumps in the road, we do not expect EM currencies to suffer more heavy losses …
This report is only available as a PDF. Click to download. … What's in store for US high-yield corporate bonds? …
24th November 2015
This report is only available as a PDF. Click to download. … Why China could breathe life back into EM equities …
23rd November 2015
This report is only available as a PDF. Click to download. … Rally in euro-zone equities has further to go …
20th November 2015
This Update aims to provide some perspective on the recent slides in oil and copper prices and the new record lows for the Baltic Dry Index of global shipping costs. It includes a more positive view on the outlook for copper (and other industrial metals) …
Central banks across the world’s frontier markets are preparing themselves as the US Federal Reserve finally moves toward its first rate hike in nine years. Central bankers in Angola, Ghana, Zambia, Mozambique, Trinidad & Tobago, and Argentina have all …
This report is only available as a PDF. Click to download. … Fed tightening not the end for EM financial markets …
19th November 2015
According to the Peterson Institute for International Economics (PIIE), the US dollar now looks “fundamentally” overvalued. However, valuations can stretch a long way before they snap, and other factors can have a greater influence on exchange rates in …
The positive reaction by investors to the minutes from October’s FOMC meeting supports our view that emerging markets (EM) will fare relatively well in 2016/17 as US interest rates are raised. We expect equities to outperform those in the developed world …
US equities have fared better than US Treasuries in 2015. We suspect that this will remain the case over the next couple of years, as the Fed tightens monetary policy. Nonetheless, the longer-term prospects for both asset classes appear to be quite poor. …
This report is only available as a PDF. Click to download. … What are the relative prospects for US equities and bonds? …
18th November 2015
The dollars of Australia, New Zealand and Canada have come under fire again, as the prices of the commodities that they export have dropped back. We think these prices are likely to recover a little next year, if not before. However, we do not expect this …
17th November 2015
This report is only available as a PDF. Click to download. … What next for the major commodity currencies? …
This report is only available as a PDF. Click to download. … Oil price set to recover …
16th November 2015
This report is only available as a PDF. Click to download. … Renewed weakness in industrial commodities should be temporary …
13th November 2015
Spain has been one of the stand-out economies in the euro-zone this year. However, the recent political developments in Catalonia and Portugal are a source of concern and opinion polls suggest that next month’s general election in Spain will result in the …
This report is only available as a PDF. Click to download. … Will a savings glut save US Treasuries from tighter Fed policy? …
12th November 2015
The unusual stability of long-term US Treasury yields during the last Fed tightening cycle between 2004 and 2006 has been attributed to a glut of global savings. We are not convinced by this explanation. In any case, surplus savings outside the US are …
This report is only available as a PDF. Click to download. … How vulnerable are euro-zone sovereign bonds to events in Portugal? …
11th November 2015
EM financial markets took the blockbuster October US employment report in their stride, and we continue to expect them to perform well even as the Fed starts to raise interest rates. … EM markets take blockbuster payrolls in their …
The UK stock market has performed poorly on an absolute and relative basis in 2015, dragged down by sharp falls in the basic materials and oil & gas sectors. These two sectors account for around one sixth of the market, which partly (although not fully) …
10th November 2015
This report is only available as a PDF. Click to download. … What’s in store for the UK stock market? …
Since the end of the last recession, there has been an almost interrupted net outflow from US mutual funds that invest in domestic equities. This partly reflects investors’ growing preference for foreign equities. We would not be surprised if this pattern …
9th November 2015
This report is only available as a PDF. Click to download. … Are markets right to be relaxed about Fed tightening? …
The relatively calm reactions to Friday’s strong US employment report support our view that the gradual return of US interest rates towards more normal levels is unlikely to be the seismic shock that many have been fearing, particularly those following …
This report is only available as a PDF. Click to download. … We think Friday’s sell-off in Treasuries has further to go …
6th November 2015
The valuation of emerging market (EM) equities relative to those in the developed world is the lowest it has been in recent memory. All else equal, this ought to lead to superior returns over the longer run, and is one reason why we expect EM equities to …
5th November 2015
This report is only available as a PDF. Click to download. … Risks to global growth may be shifting to the upside …
Although the Volkswagen emissions scandal refuses to go away, euro-zone equities have performed well recently, bolstered by a weaker euro amid growing expectations that the ECB will add additional monetary stimulus before long. We think they will continue …
