Filtered by Subscriptions: Global Markets Use setting Global Markets
We think most developed market (DM) central banks will look through temporary rises in inflation and leave rates unchanged until at least early 2023. Even so, we expect the yields of 10-year DM government bonds to rise in the next couple of years, …
3rd June 2021
We forecast that emerging market (EM) equities will make further gains between now and end-2022 as the global economy recovers further. However, they have lost a bit of ground to developed market (DM) equities recently and we doubt they will perform much …
27th May 2021
We expect the S&P 500 to make only small gains over the next few years. But we think some sectors – such as financials – will continue to do better than the index as a whole. The rally in the S&P 500 has lost some steam lately . After gaining ~11% over …
Extended delays to vaccine supply from India to the Covax facility will keep rollout in many Frontier Markets stuck in first gear. Social distancing measures will have to stay in place for longer, holding back economic recoveries, and the risk of renewed …
21st May 2021
While inflation fears have taken some steam out of the US stock market rally recently, we still think that equities in the US, and elsewhere, will make further gains over the next couple of years. Much of the focus in the markets over the past few weeks …
20th May 2021
We expect long-term Treasury yields to rise more decisively before long, driven by long-term real yields. The nominal 10-year Treasury yield has bounced around a bit following some significant data releases lately . (See here .) But the big picture is …
19th May 2021
While we don’t think there is much scope for corporate credit spreads generally to narrow much further from here, in our view spreads in the euro-zone could fall a bit more than those in the US or the UK. Despite the wobble in equity markets over the past …
13th May 2021
We expect equities in the euro-zone to outperform those in the US between now and the end of 2022 even as the economic recovery in the former continues to lag that in the latter . After underperforming the MSCI USA Index for the most part of 2020, the …
10th May 2021
We don’t think stock markets in emerging Asia will come roaring back to life any time soon, and forecast relatively small increases in equity indices there over the next few years. Having been among the best performers during the earlier stages of the …
7th May 2021
Despite tentative signs of improvement in the euro-zone economy recently and our expectation that long-term US Treasury yields will rise significantly over the next couple of years, we forecast that the yields of 10-year euro-zone government bonds will …
6th May 2021
We continue to forecast that a strong recovery in the global economy and ongoing policy support will drive further increases in developed market (DM) and emerging market (EM) equities over the next couple of years. But given our view that the yields of …
30th April 2021
We expect risk premia on emerging market (EM) bonds to diverge over the coming years even if appetite for “risky” assets generally continues to increase . To recap, after rising sharply in February-March last year, risk premia on EM bonds declined …
27th April 2021
We doubt that the recent fall in long-term Treasury yields will persist, and are sticking with our view that they will rise a fairly long way by the end of the year. To recap, after increasing significantly in the first quarter of this year, long-term …
22nd April 2021
While the valuation of the MSCI Emerging Markets (EM) Latin America Index is now low both by past standards and on a relative basis, we think that further gains in the index will be driven mostly by expectations for strong earnings. To recap, the forward …
We no longer expect the MSCI Switzerland Index to outperform the MSCI USA Index over the next couple of years and have lowered our end-2021 and end-2022 forecasts accordingly. Back in August, we predicted that the MSCI Switzerland Index would outperform …
20th April 2021
We think the IMF’s anticipated $650bn Special Drawing Rights (SDR) allocation is unlikely to have a major market impact, although it might provide countries with falling exchange rates and low levels of reserves – such as Argentina and Turkey – some scope …
15th April 2021
In our view, changes to the economic and policy outlook since the pandemic mean that corporate credit spreads in the US may remain lower than in their recent past for some time. Nonetheless, we see limited scope for them to fall much further from here. …
We expect higher government bond yields in the US than in other developed markets (DMs) to push the US dollar up, as has generally been the case since the Global Financial Crisis. Admittedly, the relationship between the government bond yield gap and the …
9th April 2021
In recent years, and particularly since the start of the pandemic, the pressure on central banks to address climate change has increased. This Update considers the potential implications for financial markets of some of the changes they have made until …
8th April 2021
We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years . EM assets and currencies have come under pressure recently. (See …
1st April 2021
We now think that 10-year government bond yields in most developed markets (DMs) will rise further. However, we think that they will climb more rapidly in the US than elsewhere in the developed world. As such, we have revised up our forecast for the US …
31st March 2021
We have recently revised up our end-21 and end-22 projections for the US ten-year Treasury yield, which has prompted us to revise down our forecasts for emerging market (EM) assets and currencies. To recap, we had previously expected EM equities to rise …
26th March 2021
We now expect that the US dollar will strengthen somewhat over the next couple of years as the US economy outperforms and its policy mix diverges from that in most other major economies. Last year, the US dollar went through two distinct phases. The …
In light of our revised forecasts for long-term US Treasury yields, we have raised our forecasts for the yields of 10-year government bonds in most other developed markets. But in most cases we doubt they will rise by as much as yields in the US. We …
24th March 2021
The sharp rise of US yields in response to this year’s shift in US fiscal policy and rapid progress on vaccinations – and the Fed’s apparent willingness to accept higher long-term interest rates – have prompted us to raise our end-2021 and end-2022 …
19th March 2021
We had expected Brazil’s stock market to be among the best performers in the world this year, but with the virus still running rampant and populist policymaking on the rise, we now think its underperformance will continue for some time. In general, we …
17th March 2021
Despite the recent turmoil in bond markets, we continue to expect developed market (DM) equities to gain ground in the rest of this year as real yields remain quite low and economic growth stays strong . DM equities have held up well recently, despite …
16th March 2021
We think that high FX-hedged yields on 10-year US Treasuries will encourage more purchases from non-US investors and may help to limit the rise in US government bond yields even as the economy recovers. Since the start of the year, the prospects for the …
12th March 2021
Just as we expect China’s economy to slow later this year even as growth picks up rapidly elsewhere, we think China’s financial markets could stand out from those in the rest of the world in the coming months. This year we forecast a significant contrast …
11th March 2021
We think that the recent outperformance of the MSCI Japan Index relative to the MSCI USA Index will continue as the world slowly gets back to normal. After lagging for most of 2020, the MSCI Japan Index has been one of the best-performing developed market …
9th March 2021
The rise of government bond yields in the US and other developed markets (DMs) this year has made a significant impact on currency markets and, if it continues, would challenge our forecast for a weaker dollar. For most of last year, the primary driver of …
5th March 2021
We don’t expect the recent rise in US bond yields to turn into a rerun of the 2013 Taper Tantrum. But even if US real yields continued to grind higher, we think that EM assets and currencies would be better placed to cope than in 2013 . The recent …
4th March 2021
A fresh allocation of IMF Special Drawing Rights (SDRs), if implemented, would provide a welcome boost to the depleted foreign exchange reserves of some distressed frontier economies. But an allocation wouldn’t address underlying dire debt dynamics, …
3rd March 2021
Given our latest forecast for oil prices, we now expect the Canadian dollar to rise further in 2021 than we previously thought, but to drop back a bit in 2022. Despite already rising more than 15% against the US dollar from the last year’s low, we think …
25th February 2021
Even if nominal government bond yields kept rising this year, we suspect that this would be driven by rising inflation compensation rather than real yields, in contrast with the past couple of weeks. Chart 1 breaks down the increases in 10-year government …
The pound has performed better than all other G10 currencies so far in 2021 (see Chart 1), rising from $1.36 at the start of January to almost a three-year high of $1.41 now. We expect the strength of sterling against the US dollar to continue and have …
24th February 2021
We still expect emerging market (EM) “risky” assets and currencies to make further gains this year, despite growing concerns about another “taper tantrum”. EM assets and currencies have made significant gains since their troughs last year. And we think …
23rd February 2021
While we expect that EM currencies in general will rise further this year due to strong appetite for risk and a recovering global economy, we think several headwinds will limit their appreciation. For a start, EM currencies as a group have already …
19th February 2021
In our view, central banks’ cautious approach to tightening means that the yields of 10-year government bonds will rise only slowly in the next few years, even as the global economy recovers further. Since the last DM Markets Chart Book on 16 th December, …
18th February 2021
We think that the positive equity market rotation that accompanied November’s vaccine announcements will resume before long if, as we expect, vaccines allow restrictions on activity to be lifted later this year. To recap, the MSCI World Index of developed …
17th February 2021
With a large fiscal stimulus package looking increasingly probable in the US, and the Fed unlikely to push back on higher inflation expectations, we think the yield of 10-year US Treasuries may rise a little further. We expect this to be driven mainly by …
12th February 2021
We think that UK equities will outperform their peers elsewhere this year, as some of the headwinds that they faced in 2020 fade or even act as tailwinds. The MSCI UK Index generally underperformed the rest of the MSCI World Index of developed market (DM) …
9th February 2021
We think that concerns about the commitment of Brazil’s government to fiscal sustainability will intensify over the next two years and weigh on its sovereign bonds and the real . While they have recovered a bit over the past few days, Brazil’s sovereign …
8th February 2021
In our view, major central banks will generally take a more cautious approach to tightening monetary policy than they did in the past. This underpins our forecast that the yields of 10-year government bonds in both developed and most emerging countries …
5th February 2021
Indian government bond yields have increased sharply since the Union Budget earlier this week but we don’t think they will rise much further, and they may even decline slightly from here. To recap, Indian bond yields have increased by ~15bp this week, to …
We think that the US will return to a more traditional approach to the greenback under Joe Biden, and we anticipate that the overall effect of his economic policies will favour a weaker dollar. Since the mid-1990s, US policymakers have generally taken a …
3rd February 2021
We continue to forecast that risky assets generally will fare well over the next couple of years as the global economy recovers and monetary policy remains accommodative. Despite their rapid rise since the start of November, we don’t think that equity …
29th January 2021
We think that the recent rally in emerging market (EM) Asian equities outside of China will slow substantially this year, and that they will begin to underperform other EM equities. To recap, a key feature of global equity markets since November’s vaccine …
27th January 2021
While we have revised up our end-2021 forecasts for the Australian dollar and the New Zealand dollar against the US dollar to reflect the strength of their recent rallies, we still think that the Kiwi will outperform the Aussie over the next couple of …
25th January 2021
While the yield of ten-year Italian government bonds has risen recently, we continue to expect it to fall back by end-2021 thanks to ECB support and a benign domestic and global backdrop . To recap, there appear to be three main reasons behind the ~20bp …
22nd January 2021