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This report is only available as a PDF. Click to download. … Europe's financial woes far from over …
11th July 2014
This report is only available as a PDF. Click to download. … What’s really “priced in” for US interest rates? …
10th July 2014
Ignoring term premiums, the yield of a “risk-free” government bond is a reflection of the short-term rates that are expected until it matures. So if the Fed raises the federal funds rate, there ought to be no effect on Treasury yields provided the change …
This report is only available as a PDF. Click to download. … Slide in the Swedish krona against the euro unlikely to last …
9th July 2014
Emerging market dollar-denominated corporate bonds outperformed similarly-rated US corporate bonds in the second quarter of this year. We expect this outperformance to continue. Admittedly, bonds issued by emerging market companies are arguably more …
8th July 2014
This report is only available as a PDF. Click to download. … US Stock Market may not be phased by Fed tightening …
The US stock market has tended to fare quite well during previous Fed tightening cycles. Although we think its performance in the next cycle will be below average, we still expect it to creep higher. … How will the US stock market handle Fed …
7th July 2014
This report is only available as a PDF. Click to download. … Strong US labour data not all good news for the markets …
This report is only available as a PDF. Click to download. … Rise in Treasury yields has probably only just begun …
4th July 2014
Japanese equities outperformed their peers in June and have continued to do well so far in July. We believe there is still plenty of scope for further gains in the Nikkei 225 even if, as we expect, the rally in the US S&P 500 starts to falter due to …
Additional easing by the ECB in June has failed to generate further downward pressure on the euro. Indeed, the euro has strengthened since the Governing Council met last month. However, while the ECB decided to keep policy on hold at its latest meeting on …
3rd July 2014
This report is only available as a PDF. Click to download. … Will bolder Fed tightening rattle the markets? …
We now think that the US FOMC will tighten monetary policy sooner, and by more, than we had previously envisaged. Our revised view is that the federal funds rate will end 2016 at 3.0%, rather than 2.5%. (See our US Economics Update , “Fed to raise rates …
2nd July 2014
This report is only available as a PDF. Click to download. … Rally in Italy’s government bonds has probably come to an end …
This report is only available as a PDF. Click to download. … Outperformance of emerging market equities likely to continue …
1st July 2014
Emerging market equities were on track to outperform their developed market counterparts in Q2 for the first quarter in six. However, they still have a lot of ground to make up. Since the end of 2012, the total return in local currency terms from the MSCI …
30th June 2014
This report is only available as a PDF. Click to download. … Still plenty of triggers for an increase in volatility …
The onset of Fed tightening has not tended to drive up spreads on investment-grade corporate bonds much in the past. In fact, in the majority of the seven major tightening cycles since the early 1970s, spreads were lower one year after the first rate hike …
27th June 2014
This report is only available as a PDF. Click to download. … Fed tightening unlikely to derail US corporate bonds …
This report is only available as a PDF. Click to download. … Assessing the evidence of bubbles in stock and property markets …
26th June 2014
We do not think that an end to the current low level of volatility in financial markets would necessarily dull investors’ appetite for riskier assets in the emerging world. In fact, our view is that emerging market assets are likely to outperform those in …
25th June 2014
This report is only available as a PDF. Click to download. … Where do we stand out from the pack? …
We are sceptical that tighter US monetary policy will spell disaster for emerging market (EM) assets. Granted, their prices fell sharply after Ben Bernanke first hinted that the Fed was thinking about scaling back its unconventional stimulus. But that was …
24th June 2014
This Update provides some examples of where our views on the economic and market outlook differ significantly from the consensus. It draws on the range of country and regional services produced by our team of nearly 50 economists worldwide. A selection of …
23rd June 2014
This report is only available as a PDF. Click to download. … Why is volatility so low in the emerging markets? …
This report is only available as a PDF. Click to download. … Rally in Japanese equities has further to run …
20th June 2014
The strength of the UK’s economic recovery and more hawkish signals coming from members of the Bank of England’s Monetary Policy Committee (MPC) have prompted us to revise our projection for the path of Bank Rate. Here we set out the implications for our …
19th June 2014
This report is only available as a PDF. Click to download. … Earlier tightening by UK MPC unlikely to prevent decline in sterling …
At almost 26, the level of Shiller’s 10-year cyclically-adjusted price/earnings ratio (CAPE) is currently more than 65% above its average since 1881. But the CAPE is inflated because reported earnings collapsed during the last recession due to tough new …
18th June 2014
The 10-year Treasury yield rose by only a small amount during the Fed’s last major tightening cycle. But this “conundrum” was largely the result of a collapse in the term premium (TP) from a level that was much higher than it is today. We continue to …
This report is only available as a PDF. Click to download. … Another bond market "conundrum" looks unlikely …
This report is only available as a PDF. Click to download. … Resurgence of Ukraine crisis adds to nervousness over Iraq …
17th June 2014
There are good reasons to be relaxed about the global economic fall-out from the latest crisis in Iraq, including the possibility that it might actually lead to an improvement in relations between the US and Iran. Nonetheless, geopolitical risks – …
16th June 2014
This report is only available as a PDF. Click to download. … On Iraq; UK and US interest rates, and corporation tax in Japan... …
This report is only available as a PDF. Click to download. … Is the euro fairly valued? …
13th June 2014
This report is only available as a PDF. Click to download. … Rally in Russia’s financial markets is probably coming to an end …
12th June 2014
We do not think the recent outperformance of Russia’s financial markets and currency will last. Indeed, the ruble has already dropped back slightly over the past week or so. There are three key reasons. First, ongoing conflict in Ukraine suggests that the …
11th June 2014
This report is only available as a PDF. Click to download. … Does low volatility pose a danger? …
The low levels of volatility in financial markets reflect a high degree of confidence in the ability of the authorities to prevent crises and respond to shocks, expectations that any policy changes will be gradual, and a reduction in economic instability. …
10th June 2014
This report is only available as a PDF. Click to download. … Dissecting the decline in Gilt yields …
This report is only available as a PDF. Click to download. … US Treasuries vulnerable to a tightening of the labour market …
9th June 2014
This report is only available as a PDF. Click to download. … ECB has a lot more work to do …
6th June 2014
The muted market responses to the ECB’s policy announcements today are not necessarily a sign of failure: equity prices, bond yields and the euro itself all edged a little further in the desired directions, at least initially, having already moved a fair …
5th June 2014
This report is only available as a PDF. Click to download. … Will the ECB succeed in weakening the euro? …
The 10-year US Treasury yield fell further in May. Unofficial Fed data suggest that most of this year’s big decline has been due to a drop in the real yield, and that the rally has reflected a collapse in the term premium. Expectations of the future path …
4th June 2014
This report is only available as a PDF. Click to download. … No conundrum in the co-movement of bond and equity prices …
This report is only available as a PDF. Click to download. … Are US Treasuries vulnerable to rising volatility? …
3rd June 2014
According to the minutes of late-April’s US FOMC meeting, “some market participants reportedly ... revised down their estimate of the average real federal funds rate over the longer term, reflecting in part changes in their assessments of long-run …
2nd June 2014
This report is only available as a PDF. Click to download. … Have investors really lowered their expectations for real rates? …
Canada continues to lead the recovery among the G7 economies after a relatively shallow recession. However, the US is only just behind, despite stumbling in Q1, and looks in better shape. Softness elsewhere may have played some part in keeping US Treasury …
30th May 2014
