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The crisis in Ukraine has the potential to have a further significant and prolonged impact on global financial markets, even though our current judgement is that the fallout is likely to be short-lived. Europe is heavily dependent on supplies of Russian …
3rd March 2014
This report is only available as a PDF. Click to download. … ECB still likely to loosen monetary policy soon …
Equities in Latin America have fared worse than those in other emerging market regions since the start of 2014, losing over 8% of their value. As a result, the 12- month trailing price/earnings ratio is now 14.7, down from over 16 at the turn of the year. …
28th February 2014
This report is only available as a PDF. Click to download. … Euro-zone CPI inflation likely to have dropped further …
The valuations of many emerging market assets are now at multi-year lows relative to those of developed markets. While there remain a number of reasons to be cautious about the outlook for emerging markets, we think this discount will fall over the coming …
27th February 2014
The yield spreads of Spanish and Italian government bonds over German Bunds began to fall sharply following the announcement of the ECB’s Outright Monetary Transactions programme in the summer of 2012 and have since continued to narrow as the economic …
This report is only available as a PDF. Click to download. … Euro-zone equities set to benefit from a weaker euro …
This report is only available as a PDF. Click to download. … Greater renminbi volatility lies ahead …
26th February 2014
One development that is likely to cap future rises in long-term government bond yields in some of the major advanced economies is the persistence of exceptionally loose monetary policy. But this is more likely to be the case in the euro-zone and Japan …
In January, net selling of emerging market securities by global ETFs and mutual funds was larger than in any month since last June according to EPFR Global. But timelier daily data from six stock exchanges in Emerging Asia show that demand for equities in …
This report is only available as a PDF. Click to download. … G20 faces stiff challenge in boosting GDP …
25th February 2014
A rise in borrowing costs triggered by less accommodative monetary policy is likely to have an adverse effect on the profits of increasingly-indebted US companies. But we doubt margins will collapse. … Will a shift in Fed policy send profits into a …
24th February 2014
This report is only available as a PDF. Click to download. … Political contagion not the biggest risk for emerging markets …
This report is only available as a PDF. Click to download. … Fed mulling new guidance to keep rate expectations low …
21st February 2014
This report is only available as a PDF. Click to download. … Euro-zone recovery probably gathered pace in Q1 …
20th February 2014
We think US equities are set to fare better than bonds in the coming years. The outperformance is likely to be less than the historical average. But we still think it could be quite substantial. … Outlook for US equities is brighter than for …
19th February 2014
This report is only available as a PDF. Click to download. … Outlook for US equities is brighter than for bonds …
UK equities underperformed other major developed markets significantly in 2013 and have fared no better than their American and European counterparts since the start of the year. But we think this underperformance is likely to be reversed over the coming …
18th February 2014
The earnings multiple of equities in Japan has fallen sharply since the start of the year. In contrast, those of the US have held broadly steady. The upshot is that the 12-month trailing price/earnings ratio for equities in Japan is now some 5 points …
This report is only available as a PDF. Click to download. … Too early to conclude that "Abenomics" is failing …
This report is only available as a PDF. Click to download. … Weather can impact commodity prices in odd ways …
17th February 2014
The implementation of growth-enhancing and risk-reducing economic reforms provides long-run benefits to investors in emerging markets. But as the recent turbulence attests, other factors play a more important role in determining asset prices in the short …
14th February 2014
This report is only available as a PDF. Click to download. … Will investors fall back in love with gold? …
One argument made by US equity bulls is that Shiller’s cyclically-adjusted price/earnings ratio (CAPE) exaggerates the extent to which the stock market is overvalued because it does not account for a structural shift in firms’ dividend policy. This …
13th February 2014
This report is only available as a PDF. Click to download. … UK monetary policy likely to remain loose for some time yet …
This report is only available as a PDF. Click to download. … Bank of England set to alter its forward guidance …
12th February 2014
Like most other emerging market assets, dollar-denominated bonds have performed poorly over the past month. But they have at least fared better than they did during last summer’s sell-off. Spreads on both government and corporate securities have generally …
11th February 2014
The Bank of England looks set to overhaul its forward guidance as part of tomorrow’s Inflation Report. But we doubt a revamped version will have a greater influence on the pricing of Gilts than the original, even if the absence of offsetting factors make …
This report is only available as a PDF. Click to download. … Yellen likely to play down weak data and EM turmoil …
This report is only available as a PDF. Click to download. … Disappointing payrolls unlikely to sway the Fed …
10th February 2014
This report is only available as a PDF. Click to download. … US non-farm payrolls likely to rebound after weather distortion …
7th February 2014
This report is only available as a PDF. Click to download. … ECB likely to loosen monetary policy further soon …
6th February 2014
This report is only available as a PDF. Click to download. … Equities are likely to recover over the course of 2014 …
5th February 2014
The recent sell-off both in emerging and developed equities has a wide range of drivers, including worries about Fed tapering and the perceived risks of a “hard landing” in China. Nonetheless, our sense is that the worst of the markets fears are overdone …
4th February 2014
One of the best-performing assets since the start of the year has been long-dated US Treasuries, with the 10-year yield falling back by some 40bp or so in January, to around 2.6%. This was largely driven by investors’ renewed demand for safe-haven assets …
This report is only available as a PDF. Click to download. … Fed tapering not the main driver of EM sell-off …
Many equity investors will be happy to see the back of January, but several lessons are worth underlining. In short, the gradual scaling back of the Fed’s asset purchases alone still seems unlikely to result in a major sell-off in the Treasury market or a …
3rd February 2014
This report is only available as a PDF. Click to download. … ECB meeting could overshadow US employment data …
This report is only available as a PDF. Click to download. … How worried should we be about China? …
31st January 2014
Almost all emerging market currencies have depreciated further against the dollar over the past month. Looking at the real effective exchange rates of emerging markets, 20 of the 24 currencies we cover now look “undervalued” relative to a 10-year trend. …
30th January 2014
This report is only available as a PDF. Click to download. … Many EM central banks still likely to shrug off currency weakness …
There have recently been few relationships which are more reliable than the tight correlation between the level of the Nikkei and the yen/dollar exchange rate. We are wary of simply extrapolating a forecast of renewed declines in the Japanese currency to …
29th January 2014
This report is only available as a PDF. Click to download. … Fed likely to continue with taper despite market volatility …
One reason for the current nervousness in emerging markets (EMs) is of course the Fed's decision to begin tapering its asset purchases. However, suggestions that EM equities will inevitably struggle in an environment of rising US government bond yields …
28th January 2014
This report is only available as a PDF. Click to download. … Fears of an emerging market rout appear overdone …
Although some currencies have fallen sharply this month, it still does not seem right to talk about a new financial crisis sweeping across all emerging markets (EMs). What’s more, the economic slowdown in China, which is also unsettling many investors, …
27th January 2014
The sell-off in emerging market (EM) assets following the Fed’s decision to taper its asset purchases in December has prompted comparisons with last summer’s turmoil. But while the latest data from EPFR Global suggest that EM assets did see significant …
This report is only available as a PDF. Click to download. … Is a new crisis set to sweep across emerging markets? …
As the Fed gradually scales back its unconventional monetary stimulus, we expect the dollar to rise against the other major developed currencies. We also expect government bond yields to increase. However, the US central bank is set to tread very …
24th January 2014
This report is only available as a PDF. Click to download. … Local rate speculation impacting currencies more than bond yields …
