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Germany will probably continue to provide temporary support for troubled euro-zone countries but retain an emphasis on austerity after its election later this month. This should minimise the demand for safe havens, such as German Bunds, from a renewed …
9th September 2013
This report is only available as a PDF. Click to download. … Mixed Employment Report leaves tapering in the balance …
One criticism levelled at Robert Shiller’s cyclically-adjusted price/earnings ratio (CAPE) is that – for the S&P 500 at least – the denominator has been depressed by accounting changes. This has led some to conclude that US equities are overvalued. But we …
6th September 2013
This report is only available as a PDF. Click to download. … ECB’s dovish outlook puts the euro under pressure …
High hopes are being pinned on interest rate liberalisation to inject some vitality into China’s economy. But the full gains from liberalisation will only be realised if the government is willing to allow state-owned borrowers to fail. This is still far …
5th September 2013
The 10-year US Treasury yield increased even further in July despite reassurances from Fed officials that US monetary policy is likely to remain highly accommodative for a long time. By contrast, the yields of 10-year German Bunds and UK Gilts fell back a …
4th September 2013
The formal introduction of forward guidance by the UK MPC failed to anchor rate expectations in August as the economic data showed continued strength. Indeed, the 2-year overnight-indexed swap rate rose a little more in the UK than in the US, seemingly …
The MPC’s commitment to keep interest rates on hold has failed to prevent the yield on 10-year Gilts rising by more than that on US Treasuries. But we think the difference in monetary policy prospects between the UK and US may soon help Gilts outperform …
This report is only available as a PDF. Click to download. … Will Spanish bond spreads narrow further? …
This report is only available as a PDF. Click to download. … Euro-zone equities are unlikely to hold onto their gains …
3rd September 2013
The surge in the yields of US Treasuries since May has been mirrored, to varying degrees, in most other advanced economies. In contrast, the yields of Japanese government bonds (JGBs) have decoupled again and actually fallen. … How has the Bank of Japan …
2nd September 2013
This report is only available as a PDF. Click to download. … US payrolls may reinforce expectation of September QE3 taper …
Emerging market currencies have come under renewed pressure over the past month and as a result, many now appear quite undervalued. Indeed, of the ten-worst performers since the publication of May’s FOMC minutes, eight now look more attractively valued – …
30th August 2013
This report is only available as a PDF. Click to download. … A recovery in emerging market currencies may be on the cards …
The extent of the latest rout in emerging market currencies has prompted comparisons with previous crises, such as that in the autumn of 2008. But we suspect some recovery may be around the corner. After all, another financial collapse is unlikely and …
29th August 2013
This report is only available as a PDF. Click to download. … Could Western intervention in Syria derail the recovery? …
This report is only available as a PDF. Click to download. … Monetary policy more likely to drive markets than geopolitics …
28th August 2013
A number of equity markets in Emerging Europe – Poland’s in particular – have proved relatively resilient during the recent emerging market sell-off. We think they may continue to outperform equities in other emerging market regions, even when prices …
27th August 2013
By 2014, the Netherlands will have seen an unprecedented fall in household spending. The resulting weakness in the Dutch economy will undermine attempts to address euro-zone imbalances, while beleaguered Dutch voters may harden their opposition to …
26th August 2013
This report is only available as a PDF. Click to download. … US Treasuries stabilise after FOMC minutes …
23rd August 2013
This report is only available as a PDF. Click to download. … FOMC minutes may have shed more light on timing of QE3 taper …
22nd August 2013
We doubt the recent significant underperformance of Brazil’s local currency government bonds will last. A surge in yields has been mainly driven by expectations of much more aggressive monetary tightening, which we do not expect to materialise. … Has …
21st August 2013
This report is only available as a PDF. Click to download. … A full-blown crisis is unlikely in India’s equity and bond markets …
The respite enjoyed by emerging markets (EMs) during the first half of July has not lasted. Indeed, net portfolio inflows remained negative over the course of the month as a whole according to EPFR Global. That being said, the picture was mixed at the …
20th August 2013
This report is only available as a PDF. Click to download. … Is the future really that much brighter for US equities than bonds? …
The year-to-date returns from US equities and (7-10 year) US Treasuries are plus 18% and minus 6%, respectively. Judging by recent shifts in asset allocation, many expect the superior performance of equities to continue. While possible, we doubt this …
19th August 2013
This report is only available as a PDF. Click to download. … Investors’ focus turns to Jackson Hole …
Euro-zone equities have staged something of a revival so far in the second half of 2013, returning over 10% and outperforming US equities. Relatively low valuations have probably played an important role in fuelling the growing demand for equities in an …
16th August 2013
This report is only available as a PDF. Click to download. … Japan’s likely policy mix points to renewed yen weakness …
This report is only available as a PDF. Click to download. … Is the future bright for euro-zone equities? …
15th August 2013
Today’s euro-zone GDP data provided a further small boost to the region’s stock markets, which have been enjoying something of a revival in the second half of 2013. However, the economic outlook in the euro-zone remains challenging and the debt crisis is …
14th August 2013
This report is only available as a PDF. Click to download. … Are UK Gilts set to benefit from falling inflation? …
13th August 2013
This report is only available as a PDF. Click to download. … UK consumer price inflation may fall to 2% by year-end …
There are many factors behind the recent partial recovery in the yen and associated weakness in the Nikkei, but perhaps the most important is fading expectations of more aggressive monetary easing by the Bank of Japan. However, we continue to expect …
12th August 2013
This report is only available as a PDF. Click to download. … UK MPC was probably united over forward guidance …
Dollar-denominated emerging market government bonds have recovered some poise over the past month. This has been driven primarily by a decline in credit spreads, which have fallen significantly from their recent peaks. However, emerging market …
8th August 2013
This report is only available as a PDF. Click to download. … UK MPC’s forward guidance has little initial impact …
The UK MPC’s "forward guidance" had little initial impact on Gilts on Wednesday but we still think it will help them to outperform US Treasuries over time. That being said, we do not expect the 10-year Gilt yield to fall throughout our forecast window. …
7th August 2013
This report is only available as a PDF. Click to download. … Have US GDP revisions affected the valuation of the stock market? …
The recent change to the accounting treatment of some types of "intellectual property products" in the US national income and product accounts has resulted in a decline in the price/earnings ratio of the US stock market. (We suggested this would happen in …
6th August 2013
This report is only available as a PDF. Click to download. … What next for EM dollar-denominated corporate bonds? …
This report is only available as a PDF. Click to download. … Fed still likely to taper QE3 in September …
5th August 2013
This report is only available as a PDF. Click to download. … Will the decoupling of government bonds continue? …
2nd August 2013
A slow but steady removal of monetary stimulus in the US over the next few years is likely to have important implications for a wide variety of financial market instruments. It should buoy the dollar, put gradual upward pressure on the yields of …
1st August 2013
This report is only available as a PDF. Click to download. … Fed to tread cautiously in “tapering” its bond purchases …
Dollar-denominated emerging market government bonds underperformed similarly-rated US dollar corporate bonds significantly in the recent sell-off. Most of this underperformance has not been unwound, even though sentiment towards emerging markets has …
31st July 2013
This report is only available as a PDF. Click to download. … US economy probably slowed sharply in Q2 …
This report is only available as a PDF. Click to download. … Recent weakness in the dollar unlikely to be sustained …
30th July 2013
This report is only available as a PDF. Click to download. … Major central banks unlikely to make radical policy shifts …
29th July 2013
This report is only available as a PDF. Click to download. … Sterling unlikely to suffer from forward guidance …
26th July 2013
