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This report is only available as a PDF. Click to download. … Are markets right to be relaxed about Fed tightening? …
9th November 2015
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 …
Over the past month, the US dollar’s performance against other “major” currencies has been mixed. It has fared poorly against those of the two major commodity exporters, Australia and Canada, which have benefited from an improvement in sentiment towards …
4th November 2015
This report is only available as a PDF. Click to download. … We expect euro-zone equities to continue to recover …
Whether or not the FOMC decides to raise rates for the first time in December or early next year, we think Treasury yields will climb from their current levels for two key reasons. … Treasury yields set to rise (even if first rate hike is in …
3rd November 2015
This report is only available as a PDF. Click to download. … EM equities for the long run? …
This report is only available as a PDF. Click to download. … Five positives for commodities from China …
2nd November 2015
The relief rally in Turkish markets is likely to fizzle out before long as it becomes clear that the AK Party will deliver more of the same. Our expectation is that equities will lag behind those elsewhere in the emerging world, while we anticipate that a …
This report is only available as a PDF. Click to download. … Dollar to climb further against euro and yen …
30th October 2015
Some commentators have suggested that the prospect of an earlier rate hike from the Fed and the resulting appreciation of the US dollar will significantly reduce the pressure on the ECB and BoJ to ease policy further. However, we think this is wrong on a …
This report is only available as a PDF. Click to download. … Return of foreign investors to buoy EM markets …
29th October 2015
Notwithstanding the risk of occasional hiccups, portfolio flows should support decent returns in EM financial markets during the next couple of years. … Rising portfolio investment another positive for EM …
This report is only available as a PDF. Click to download. … Global easing bias remains, despite prospect of Fed tightening …
28th October 2015
With the FOMC almost certain to leave interest rates on hold later today, the event which is perhaps more likely to move US markets this week could be the advance (first) estimate for Q3 GDP, scheduled for release on Thursday. Whereas …
While the FOMC meeting will surely conclude today with no change in policy, we continue to expect US interest rates to be raised more than the markets anticipate in 2016 and beyond. Nonetheless, this prospect should not be as alarming as it sounds, both …
Our forecast that the prices of many natural resources will edge a little higher over the next couple of years suggests that the downside for commodity currencies will be limited even after the Fed begins to raise interest rates. … Commodity currencies …
This report is only available as a PDF. Click to download. … Why commodity investors need not fear the Fed …
27th October 2015
Equities are likely to suffer in the event of yet another damaging stand-off over the US federal debt ceiling. However, a resurgence in safe-haven demand and expectations that the Fed would wait even longer before raising rates may be positive for …
26th October 2015
This report is only available as a PDF. Click to download. … Outperformance of EM equities set to continue …
Attractive valuations, loose global monetary conditions and a recovery in China should support further gains in emerging market equities. Indeed, we continue to expect the MSCI Emerging Markets Index to outperform the MSCI World Index of developed markets …
This report is only available as a PDF. Click to download. … Rebound in the New Zealand dollar likely to prove short-lived …
23rd October 2015
EM financial markets have rebounded from the summer turmoil as China’s economy has shown signs of stabilisation and Fed lift-off has been delayed. Equities have risen about 5% on average since the end of August, while EM bond indices have returned 1-2%. … …
22nd October 2015
Four frontier markets are due to hold national elections in the coming month. The most high-profile election is in Argentina where Daniel Scioli, the candidate of the ruling left-wing coalition, appears on course to win the country’s presidency. With the …
This report is only available as a PDF. Click to download. … We expect the euro to fall further against the dollar …
We think the future for most emerging markets is brighter than generally believed. Their poor performance has been a function of close ties with troubled China, heavy reliance on exports of commodities that China consumes, and perceived vulnerability to …
21st October 2015
This report is only available as a PDF. Click to download. … Euro-zone equities to benefit from renewed euro weakness …
This report is only available as a PDF. Click to download. … Would Fed tightening cause equities to stumble? …
20th October 2015
This report is only available as a PDF. Click to download. … Risks to commodity prices shifting to the upside …
19th October 2015
This report is only available as a PDF. Click to download. … What would more QE from the ECB do for German Bunds? …
16th October 2015
This report is only available as a PDF. Click to download. … Is sterling set for a fall? …
15th October 2015
This report is only available as a PDF. Click to download. … What next for German Bunds? …
14th October 2015
We expect the Bank of Canada to hold its policy rate at 0.50% next week and retain its neutral stance on the rate outlook. The incoming data indicate that third-quarter GDP growth was stronger than the Bank initially expected. But the uncertain global …
13th October 2015
This report is only available as a PDF. Click to download. … Treasuries remain vulnerable to a recalibration of rate expectations …
This report is only available as a PDF. Click to download. … Oil prices to climb further (even without Syria risks) …
12th October 2015
The Peterson Institute for International Economics (PIIE) is likely to update its estimates of fundamental equilibrium exchange rates (FEERs) next month. We suspect that these will show that the New Zealand dollar is no longer overvalued against the US …
9th October 2015
This report is only available as a PDF. Click to download. … Is this the turn for commodities? …
The Peterson Institute for International Economics (PIIE) is likely to publish its latest semi-annual estimates of fundamental equilibrium exchange rates (FEERs) next month. We suspect that these will show that only a few currencies in its sample remain …
This report is only available as a PDF. Click to download. … Does the increase in credit spreads presage an economic slowdown? …
8th October 2015
This report is only available as a PDF. Click to download. … Which currencies are still fundamentally overvalued? …
7th October 2015
This report is only available as a PDF. Click to download. … Why isn’t gold doing even better? …
6th October 2015
The federal funds rate is now expected to rise to less than 3% in a decade’s time, judging by the risk-neutral US Treasury yield curve. This rate remains well below the average projection of FOMC participants of the “longer run” level of the federal funds …
This report is only available as a PDF. Click to download. … Japan equities set to benefit from further BoJ easing …
5th October 2015
China appears to hold a larger than average share of its fx reserves in US dollars, UK pounds and Australian dollars at the expense of euros and the Japanese yen. This is the conclusion we have tentatively reached on the basis of the latest currency …
2nd October 2015
This report is only available as a PDF. Click to download. … Weak US labour data add to uncertainty in global markets …
The disappointing US jobs report for September will clearly do little to improve investor confidence in the global economy. Yes, it will probably delay the first interest rate hike from the Fed until early next year. However, our view remains that the …
This report is only available as a PDF. Click to download. … Is China experiencing a hard landing? …
1st October 2015
