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This report is only available as a PDF. Click to download. … How will we tell if the ECB’s QE is likely to be a success? …
21st January 2015
Investors’ retreat from emerging markets over the past month has reflected growing concerns about the implications of the collapse in the price of oil. Admittedly, most countries (and the world as a whole) should be better off as a result of the collapse, …
This report is only available as a PDF. Click to download. … Has demand from overseas fuelled the rally in Treasuries? …
20th January 2015
We think the Fed has been instrumental in the collapse of term premiums on long-dated Treasuries and that the effect of its actions will not be unwound soon. If we are right, and other depressing influences on term premiums are not reversed either, yields …
This report is only available as a PDF. Click to download. … Danish krone peg likely to hold …
19th January 2015
The surge in the Swiss franc that followed the abandonment of the Swiss National Bank’s exchange rate ceiling against the euro means it is now the most overvalued of all the developed market (DM) currencies in terms of the deviation of the real effective …
16th January 2015
This report is only available as a PDF. Click to download. … How would markets in the euro-zone react to QE from the ECB? …
The SNB’s decision to abandon its exchange rate ceiling of 1.20 francs per euro sent shockwaves through the financial markets today. This Update provides some of our initial reactions. … Some market implications of the SNB's change in …
15th January 2015
This report is only available as a PDF. Click to download. … SNB sends shockwaves through the markets …
The European Central Bank (ECB) looks set to announce a quantitative easing (QE) programme at its next policy meeting. However, we doubt that it would provide a large boost to euro-zone equities. The ECB is unlikely to be very bold and a modest QE program …
This report is only available as a PDF. Click to download. … What would QE do for euro-zone equities? …
14th January 2015
Since the end of November, the renminbi has depreciated slightly against the US dollar. However, the real effective exchange rate of China’s currency has continued to appreciate sharply, as the renminbi has strengthened against most other currencies. …
13th January 2015
This report is only available as a PDF. Click to download. … New forecasts for US Treasuries …
We still expect the 10-year US Treasury yield to rise this year from its current level of around 1.9% as the Fed begins to tighten policy, but have decided to lower our end-2015 forecast significantly, to 2.5% from 3.75%, in response to recent market …
This report is only available as a PDF. Click to download. … Australian dollar may yet have further to fall …
12th January 2015
This report is only available as a PDF. Click to download. … Another strong jobs report keeps early Fed tightening on the cards …
9th January 2015
The spreads over Treasuries of US high-yield corporate bonds have risen further since the end of November, continuing their increase since the autumn. This has largely been driven by a rise in borrowing costs for energy firms, whose finances have come …
This report is only available as a PDF. Click to download. … How vulnerable are TIPS to growing expectations of deflation? …
8th January 2015
This report is only available as a PDF. Click to download. … What has been driving the rally in US Treasuries? …
7th January 2015
As investors’ confidence in the euro-zone has waned, overall inflows of portfolio capital from abroad have slowed. We suspect this trend may continue, undermining the euro further in the process. … Will capital flows put further pressure on the …
This report is only available as a PDF. Click to download. … Euro to fall even further …
6th January 2015
This report is only available as a PDF. Click to download. … Are markets being too complacent about the latest crisis in Greece? …
5th January 2015
Last week, the Russian finance ministry claimed that the ruble was “extremely undervalued”. Admittedly, it made the claim when the currency was around 70 to the dollar, and the exchange rate has since strengthened to 55. But given that the rate was not …
23rd December 2014
This report is only available as a PDF. Click to download. … How will the markets react to Fed tightening next year? …
19th December 2014
A tighter monetary policy of the Federal Reserve will potentially be the most important factor affecting the global financial markets next year. In this Focus, we consider the reactions we can expect to see, both in the US itself and elsewhere in the …
This report is only available as a PDF. Click to download. … Oil, not Fed policy, the key for US high-yield corporate bonds …
18th December 2014
Although the Norwegian krone is on course to be the worst performing G-10 currency this year, having depreciated by almost 20% against the US dollar since January, we doubt that it is now significantly undervalued. Admittedly, the real effective exchange …
We are not convinced by the Russian finance ministry’s claim on Wednesday morning that the ruble is “extremely undervalued”. After all, Russia has undergone an enormous deterioration in its terms of trade as a consequence of the slide in the price oil, …
17th December 2014
This report is only available as a PDF. Click to download. … Is the tide now turning for the ruble? …
This report is only available as a PDF. Click to download. … As Russia’s crisis deepens, investors batten down the hatches …
16th December 2014
The sharp drop in oil prices has played a major role in the recent poor performance of the MSCI Frontier Markets (FM) Index, in which a small number of oil exporting countries have large weightings. Indeed, the index is on course to underperform the MSCI …
15th December 2014
It is tempting to think that a prolonged period of mild deflation in the euro-zone would be terrible news for equities. After all, Japan’s stock market generally fared poorly for much of the time between 1999 and 2012, when the general price level in that …
This report is only available as a PDF. Click to download. … Investors in EMs still showing a willingness to differentiate …
12th December 2014
Since the end of October, emerging market dollar-denominated corporate bonds have performed much worse than comparably-rated US corporate bonds. This has been the result of increasing credit spreads amid concerns that the significant rise in the …
11th December 2014
This report is only available as a PDF. Click to download. … Oil price slide elicits opposing policy responses in Russia & Norway …
This report is only available as a PDF. Click to download. … Russia’s central bank set to hike its key policy rate again …
10th December 2014
This report is only available as a PDF. Click to download. … How vulnerable are EM corporate bonds to a stronger dollar? …
9th December 2014
This report is only available as a PDF. Click to download. … Brent crude likely to find strong support at $60 per barrel …
8th December 2014
It is sometimes argued that a lower oil price is a threat to Treasuries because oil exporters typically save a larger share of their income than oil importers and are more inclined to put their savings into US government bonds. We think the argument …
The yield of 10-year US Treasuries has fallen further over the past month. But we expect it to rise as the Fed tightens policy. Admittedly, during the last major tightening cycle in 2004-2006, it barely rose. But in this case, the increase in the part of …
5th December 2014
This report is only available as a PDF. Click to download. … Strong US employment report takes a toll on the euro …
This report is only available as a PDF. Click to download. … Will the rally in China’s stock market run out of steam? …
4th December 2014
Would a sovereign default in Venezuela, which now seems increasingly likely given the plunge in the price of oil, cause upheaval in the global financial markets? We suspect not, even though a sovereign default in Russia – another major net exporter of oil …
3rd December 2014
The latest estimates by the Peterson Institute for International Economics in October suggested that the Turkish lira remains one of the most “fundamentally” overvalued emerging market currencies that we track. This is due to Turkey’s substantial current …
This report is only available as a PDF. Click to download. … Should we be worried about a default in oil-dependent Venezuela? …
This report is only available as a PDF. Click to download. … Is the rise in high-yield corporate bond spreads a warning sign? …
2nd December 2014
This report is only available as a PDF. Click to download. … OPEC’s loss is the rest of the world’s gain …
1st December 2014
This weekend the Swiss public will probably reject a proposal to force the Swiss National Bank (SNB) to increase its gold holdings. Nonetheless, a surprise “yes” would provide a significant boost to the gold price and might also undermine the SNB’s …
28th November 2014
October saw net outflows from global ETF and mutual funds that invest in emerging market (EM) assets for the first time since March. This was primarily driven by net outflows from funds that invest in equities, while those that invest in bonds also saw a …
