Filtered by Subscriptions: Global Markets Use setting Global Markets
We remain of the view that slower growth in the US and Chinese economies will push stock markets down sharply again this year, and prevent the yields of high-grade bonds from rising much, if at all. Nonetheless, we have made some tweaks to our key market …
11th January 2019
Lower prices of commodities have weighed on the currencies of those countries whose fortunes depend heavily on them. Although we generally do not anticipate further large falls in prices in 2019, we think that the Australian and New Zealand dollars remain …
10th January 2019
Three big “non-consensus” calls for 2019 on our Global Markets service are i) developed market government bonds will outperform developed market equities; ii) emerging market equities won’t bottom out before developed market equities; and iii) the US …
9th January 2019
The S&P 500 has already fallen to around 2,450, a bit below our once-bearish end-2019 forecast of 2,500. This is causing us to question whether it will even end the year that high. … Putting the slump in the S&P 500 into …
4th January 2019
Growth in frontier economies eased over the course of 2018 and we expect activity to be soft in 2019. At a regional level, we think that growth will slow further in frontier economies in Emerging Asia and Emerging Europe next year – the latter will be led …
21st December 2018
Even if the domestic situation in France has calmed down, the underlying causes of the recent unrest linger. What’s more, we think that France has become more vulnerable to contagion risks from Italy. … French bonds likely to remain under pressure in …
19th December 2018
Although corporate credit spreads in the euro-zone have already risen a long way, we think that they will continue to increase as concerns about growth in the region intensify. … Euro-zone corporate credit spreads likely to rise …
18th December 2018
EM equities have had a torrid year, and we doubt that things will get any better in 2019. Indeed, we forecast that the MSCI EM Index will end next year around 10% below its current level, a similarly-large fall to the one that we are forecasting in …
17th December 2018
We think that there is more upside, than downside, risk for sterling when we weigh up the potential outcomes that could result from the chaos surrounding the UK’s scheduled departure from the EU. … Weighing up the Brexit risks for …
14th December 2018
Although the S&P 500 has already fallen by roughly 10% since early October, we don’t expect it to rebound in 2019. Given the outlook for the US economy, we think that it will end next year even lower. … Don’t bank on the US stock market recovering in …
12th December 2018
The yield of the JP Morgan EMBI Global has edged up over the past month as a whole, despite a slump in underlying Treasury yields. We expect this pattern to be repeated next year. … EM dollar bond yields likely to rise even …
11th December 2018
In contrast to their relatively strong performance over the last decade, we expect financials in the US to fare worse in general than their counterparts in the euro-zone and the UK next year. … US financials unlikely to keep outperforming in …
10th December 2018
Despite the fact that it has already fallen a long way, we think that the MSCI Emerging Markets (EM) Index will drop by another 10-15% by the end of next year. This is partly because we expect earnings growth to slow markedly in 2019. … Why earnings are …
We think that this week’s turbulence provides a reasonable guide to the trends to watch for in markets next year. In particular, while both the S&P 500 and US Treasury yields have started to drop a little sooner than we had previously anticipated, we …
7th December 2018
While 2018 has been a very difficult year for “long-only” investors to make money from anything , 2019 may be a bit less challenging. Our view is that US government bonds will offer some reward next year. … In search of a return … from …
Worries about the prospects for the US economy have contributed to the ongoing flattening of the US Treasury yield curve and the sell-off in the S&P 500. We think that both those trends will continue in 2019, as growth there does indeed slow sharply. … …
5th December 2018
Frontier market dollar debt markets have been rattled in recent months. Part of this is due to the fall in oil prices, which helps to explain the widening of spreads in Venezuela and Nigeria. But that’s not the whole story. Investors seem to be …
30th November 2018
There’s an air of optimism in markets about the meeting between Presidents Trump and Xi at the G20 this weekend, where trade will be top of the agenda. An agreement between the two leaders might temporarily ease tensions. But it would be highly unlikely …
29th November 2018
While doubts have been raised over whether the Japanese yen remains a safe haven in light of its poor performance in the summer, we think that the currency will retain this status for the foreseeable future. … The yen’s days as a safe haven are probably …
Although Italian government bonds (BTPs) are already trading like “junk”, we think that their credit spread will rise even further next year for several reasons. … Italian BTPs will probably continue to trade like …
28th November 2018
The recent pick-up in US corporate credit spreads is more than just a response to the slump in oil prices over the past couple of months. We think that it also reflects worries about the outlook for the global economy, which are likely to intensify next …
26th November 2018
While the 10% drop in the S&P 500 since early October can be partly blamed on plunging oil prices and concerns about global demand, it also seems to reflect justified fears about the US economic outlook. … What the S&P’s slump tells us about the US …
We think that the performance of UK financial assets would be varied in the event of a no deal Brexit, which has become increasing likely given the recent political chaos in Westminster. … No deal Brexit would be a mixed bag for UK …
22nd November 2018
Italian government bonds are now trading like “junk”, but we think that the spread between the yields of 10-year BTPs and German Bunds will increase even more in 2019 as Italy’s problems escalate and the US economy slows. … Italy’s now-junk credit spread …
20th November 2018
A reassessment of the prospects for interest rates will probably play a far bigger role than the Fed’s quantitative tightening (QT) in influencing Treasuries next year. Indeed, we expect the 10-year yield to fall back to 2.5% after the Fed stops hiking …
15th November 2018
We think that equities in the euro-zone will be caught in the crossfire of a stock market sell-off in the US next year, as the economy there slows. Our forecast is for the S&P 500 to fall by 14% in 2019 and we don’t think that equities in the euro-zone …
Although the MSCI Emerging Markets (EM) Index has recovered a little in the past couple of weeks, it is still below its level a month ago, and we suspect that it will fall much further by the end of next year. … EM equities likely to remain on the …
14th November 2018
We expect the stock market in Japan to come under more fire in 2019, as equity prices tumble in the US; the yen strengthens; and the Trump administration continues to exert pressure on China. Our forecast is that the Nikkei 225 will end next year at …
12th November 2018
We think that the global economy will slow in 2019 and take a toll on equities generally. If history is any guide, Swiss stocks will not be spared. But two factors suggest that they will hold up better than most. … Swiss stock market likely to fall less …
9th November 2018
The big rise in the real yields of US Treasury Inflation Protected Securities (TIPS) over the past year or so is a logical response to tighter Fed policy than investors were expecting. But it is likely to be partly reversed in 2019, when the central bank …
7th November 2018
We don’t expect today’s midterm elections in the US to have a major bearing on its stock market, even if the Republicans retain both chambers of Congress or the Democrats do very well. … US midterms unlikely to trigger a big market …
6th November 2018
Although the gap between the valuations of equities in emerging and developed markets has widened recently, and is now quite large by historical standards, this is no guarantee that the former will outperform over the next year or so. … Short-term pain, …
2nd November 2018
Although Italy’s problems are likely to continue to weigh on the euro next year, we still think that the currency will strengthen against the dollar in response to a favourable shift in monetary policy. … Italy’s problems shouldn’t stop euro’s revival in …
Although some of things that triggered a rebound in the US dollar in October are likely to continue to underpin the currency in 2019, we still think that it will weaken then as the Fed stops raising rates sooner than investors are anticipating in response …
1st November 2018
Although the valuations of emerging market (EM) equities have tumbled compared to those of their developed market (DM) peers, we are not convinced that they will deliver much higher returns over the next year as a result. There is more evidence that they …
31st October 2018
While this month’s slump in the US stock market can’t be blamed on bad economic news, it can be attributed – at least in part – to concerns about the prospects for economic growth. We think that these worries are justified and forecast that the S&P 500 …
30th October 2018
A handful of the more vulnerable Frontier Markets, including Ukraine, Pakistan and Bahrain, have received (or are close to getting) IMF or bilateral funding, but external risks remain a key concern. For one thing, meeting the conditionality of these …
26th October 2018
Although we expect Italian bonds to remain under pressure over the coming years as the country’s fiscal and economic outlook continues to deteriorate, we think that European bond markets are generally less vulnerable to contagion than during the Greek …
25th October 2018
Although October’s EU summit has come and gone without a Brexit deal in place, implied probabilities of a “no deal” do not seem to have increased very much, which is reflected in the resilience of sterling. But with many hurdles to overcome before any …
24th October 2018
Even stepping back from the volatility in stock markets around the world this week, global equities have clearly been weakening for a while, and are likely to do so again by the end of next year in our view. Three developments from their recent slump shed …
23rd October 2018
We think that the S&P 500, Treasury yields and the US dollar will all fall by the end of next year, as a sharp slowdown in the US economy prompts the Fed to stop hiking rates sooner than investors are anticipating. We expect equities outside the US to …
19th October 2018
Even though emerging market (EM) currencies have fallen a long way against the US dollar in recent months, in most cases their valuations do not yet appear particularly low. This pours cold water on the idea that low valuations will provide significant …
16th October 2018
Although the Norwegian krone has been one of the best-performing currencies during the past couple of months, we expect it to weaken over the next two years as oil prices fall, economic growth slows, and the Norges Bank ends its tightening cycle sooner …
12th October 2018
The 5% drop in the S&P 500 so far this week suggests that investors are starting to factor in the prospect of the US economy slowing in response to tighter monetary policy. We think that this will start to happen in 2019, causing equities in the US and …
11th October 2018
The surge in Italian government bond yields in recent months has brought back to the forefront the vulnerability of the banking sector to falls in bond prices. Given our view that Italian bond yields will continue to trend higher over the coming years and …
9th October 2018
Although we have raised some of our bearish forecasts for developed market equities, we still think that they will fall a long way in 2019 as the US economy falters. And while we have also made a couple of tweaks to our projections for currencies and …
8th October 2018
Although the 10-year government bond yield in Italy has already climbed by about 60bp since plans were announced for an EU-defying budget deficit, we think that it will rise by a similar amount between now and the end of next year. If so, the stock market …
5th October 2018
Increases in the prices of industrial commodities have helped to drive a rebound in some emerging market (EM) currencies since early September. But that rebound is already showing signs of faltering. We suspect that it will unwind, as commodity prices …
2nd October 2018
While the recent shift towards tighter monetary policy in many emerging markets (EMs) is likely to continue, this is largely priced in to markets already. But we think that local currency government bond yields will resume their rise in most cases …
28th September 2018
Italian bonds have come under renewed pressure after the government announced plans to loosen fiscal policy by more than markets anticipated over the coming years. We think that Italian bond yields will continue to trend higher as we expect the budget …