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The lukewarm market reaction to the end of the US government shutdown and the suspension of the debt ceiling can largely be explained by the fact that the chances of default were already assumed to be very low. What's more, the reassuring signals from …
17th October 2013
This report is only available as a PDF. Click to download. … Thursday 17th October will be just another day …
The debt ceiling crisis has made it more expensive to insure against a default by the US government than the German or UK governments. (See Chart.) However, this development has not prevented long-term US Treasuries from outperforming German Bunds and UK …
16th October 2013
The chaos in Washington has left the US at greater risk of losing its remaining AAA credit ratings even if an imminent default is avoided. However, while this would be a political embarrassment, the impact on financial markets and the wider economy should …
This report is only available as a PDF. Click to download. … UK unemployment likely to fall only slowly …
Expectations were growing on Tuesday that US lawmakers would soon reach an agreement to extend the debt ceiling before the Treasury runs out of cash. But there is still an outside chance that a deal will not be struck before then. If, as a consequence, …
15th October 2013
This report is only available as a PDF. Click to download. … US Treasury yields unlikely to soar in the event of a default …
Emerging market currencies in all the major regions have generally risen against the dollar since this time last month. Those of countries in Emerging Europe have fared the best on average, although the strongest performer has actually been the Brazilian …
14th October 2013
In the event of the US government failing to service its debts, there are some good reasons to argue that Treasury yields would jump and others to suggest that they would actually fall. Our view is that yields probably would rise but not by much, given …
This report is only available as a PDF. Click to download. … Kicking the can down the road? …
This report is only available as a PDF. Click to download. … Gold should still be one of the few winners from US default …
11th October 2013
This report is only available as a PDF. Click to download. … Fed policy to be much the same with Yellen in the driving seat …
10th October 2013
Despite all the understandable concerns, market pricing suggests that most investors are still fairlyrelaxed about the chances that the US government will default on its debt. As it happens, we think thiscalm is justified, both because default is likely …
9th October 2013
Japanese equities have dropped further than their peers so far this month and are among the most vulnerable to the fall-out from a potential US government default. Nonetheless, once the debt-ceiling crisis is resolved, we would expect the Nikkei to …
This report is only available as a PDF. Click to download. … The US government is not Lehmans …
Although the shutdown of the federal government and the lack of agreement in Congress on extending the debt ceiling have pushed up the cost of insuring against a default by the US sovereign, this development has not had an adverse impact on longer-dated …
8th October 2013
This report is only available as a PDF. Click to download. … Recent weakness in the Nikkei is likely to be short-lived …
Today we have revised up our UK GDP growth forecasts. But we still think that the Bank of England will not raise interest rates until 2017 at the earliest. As a result, we anticipate that Gilt yields will remain at unusually low levels for a few years …
7th October 2013
This report is only available as a PDF. Click to download. … US fiscal uncertainty may well drag on throughout this week …
This report is only available as a PDF. Click to download. … Investors likely to maintain their demand for US Treasuries …
4th October 2013
This report is only available as a PDF. Click to download. … Dollar weakness should prove only temporary …
3rd October 2013
This report is only available as a PDF. Click to download. … Investors’ calm over US government shutdown may be short-lived …
2nd October 2013
The rebound in emerging market (EM) equities in September partly reflected the markets’ growing realisation that the Fed is likely to withdraw its monetary stimulus only very slowly. In addition, valuations remain favourable and growth in the major …
1st October 2013
This report is only available as a PDF. Click to download. … Investors complacent about renewed political uncertainty in Italy …
This report is only available as a PDF. Click to download. … US debt-ceiling crisis may shake confidence further …
30th September 2013
This report is only available as a PDF. Click to download. … US equities and government bonds diverge post-Fed …
27th September 2013
With Germany unlikely to alter its hardline approach towards the euro-zone’s more troubled governments following last weekend’s federal election, we doubt that the credit spreads of peripheral euro-zone bonds will contract much further. … Narrowing in …
26th September 2013
This report is only available as a PDF. Click to download. … Fall-out from US debt-ceiling crisis may not be as severe as 2011 …
The recovery in emerging market equities – up almost 6% on average since this time last month – has boosted price/earnings ratios across almost all the major regions. From a historical perspective, valuations still look attractive in EMEA. By contrast, …
25th September 2013
The prospect of a US Federal government shutdown is likely to undermine equity prices further in the coming days, despite the possibility that the resulting uncertainty could prevent the US central bank from tapering its asset purchases at all this year. …
EPFR Global data for July and August suggest that ETF and mutual fund portfolio flows into emerging markets (EMs) may have remained negative in Q3 2013 for the second quarter running amid ongoing concerns about the US Fed’s monetary policy. However, …
24th September 2013
This report is only available as a PDF. Click to download. … Only small gains in store for US equities …
This report is only available as a PDF. Click to download. … Euro-zone peripheral bonds unlikely to benefit from German election …
This report is only available as a PDF. Click to download. … German election unlikely to trigger renewed demand for safe havens …
23rd September 2013
It should only be a matter of time before the recent fall in the number of people losing their job is followed by a rise in the number of people finding a job. Less firing and more hiring is obviously a healthy recipe for faster employment growth, which …
20th September 2013
This report is only available as a PDF. Click to download. … US Treasuries rally after Fed delays QE3 tapering …
We have reviewed our key market forecasts in light of the FOMC’s largely unexpected decision to delay a tapering of its asset purchases. The new numbers are presented in the tables on pages 1 and 2. Most of the changes that we have made are to our …
19th September 2013
This report is only available as a PDF. Click to download. … Can Treasury yields remain low without Fed purchases? …
Strong investor flows into European equities since the start of the year have partly been driven by a perception that valuations are favourable. But while the headline metrics suggest that European equities still appear undervalued from a historical …
18th September 2013
The yield spread of 10-year government bonds in Portugal over German Bunds has increased by about 70bp since this time last month, in stark contrast to a small decrease in the yield spread of 10-year government bonds in Spain. Although the current …
This report is only available as a PDF. Click to download. … Fed will probably announce a small cut in its asset purchases …
This report is only available as a PDF. Click to download. … Positive market reaction to Summers' withdrawal may not last …
17th September 2013
Returns from emerging market equities have been positive since this time last month. Moreover, emerging market equities appear to have stopped underperforming developed market equities. If this continues, it would restore the usual pattern whereby …
16th September 2013
This report is only available as a PDF. Click to download. … Fed is likely to announce a tapering of QE3 …
This report is only available as a PDF. Click to download. … Sterling's rally against the dollar is unlikely to be sustained …
13th September 2013
One of the market’s concerns ahead of the Fed taper is whether there will still be sufficient demand for Treasuries from other investors to prevent a further surge in yields when the US central bank reduces its own purchases. But this risk is probably not …
12th September 2013
Whether at next week’s FOMC meeting or later this year, the Fed will almost certainly decide to scale back its asset purchases in the months ahead. However, Fed tapering is unlikely to be the major shock to the prospects for the rest of the world, or …
11th September 2013
This report is only available as a PDF. Click to download. … Enthusiasm for emerging market equities likely to grow …
This report is only available as a PDF. Click to download. … What’s really been behind the bounce in Japanese equities? …
10th September 2013
The headlines in Japan today have been dominated by the successful Olympics bid, but there will be many decisions with much greater economic and market significance to be taken before 2020 – not least whether to press ahead with the planned doubling of …
9th September 2013
