Filtered by Subscriptions: Global Markets Use setting Global Markets
Despite the sell-off in most emerging market currencies over the past week, we continue to think that most will strengthen against the US dollar as the global economy recovers. In particular, we have recently revised up our forecasts for the Chinese …
24th September 2020
While we continue to forecast that equity markets will make further ground in the next few years, the rapid increase in COVID-19 cases in Europe poses a downside risk to our projections. We have been arguing for a while that with the major economies …
21st September 2020
Although policymakers in Japan may prefer a weaker yen, in our view it is more likely to rise than to fall. When Japan’s retiring prime minister Shinzo Abe came to power in late 2012, one of the key aspects of his “Abenomics” economic package was the …
17th September 2020
The renminbi has risen 5% against the US dollar since May, to its strongest since early 2019. And with China on course for a more pronounced recovery than elsewhere, its external position the strongest in a decade, and onshore yields unusually attractive …
While we continue to forecast that developed market (DM) “risky” assets will make further ground over the next couple of years, the rapid increase in new coronavirus cases in Europe poses a downside risk to our generally optimistic forecasts. As we set …
16th September 2020
Despite the recent resurgence in uncertainty about the UK's future relationship with the EU, we think that it is still possible to make a positive case for UK assets. Although uncertainty around the Brexit process has re-emerged in the past few days, it …
11th September 2020
Despite its recent rally, the euro is not particularly strong in our view, and we think that it could well rise further over the next couple of years. Since its lows in mid-March, the euro has gained about 10% against the US dollar, rising from $/€1.06 to …
The dislocations in financial markets caused by the coronavirus shock have now largely disappeared and, while there may be further bouts of volatility as the global economy continues to recover (such as yesterday’s sell-off in US tech stocks), our view …
4th September 2020
While we think that nominal interest rates and bond yields in developed markets will remain around their current ultra-low levels for some time, we think that their real counterparts will fall further in the US relative to the euro-zone and Japan. In our …
28th August 2020
We think that the recent outperformance in local-currency terms of the MSCI EM Index relative to the MSCI World Index of developed market (DM) equities will continue as the global economy recovers further. (See Chart 1.) Back in April , when stock markets …
25th August 2020
We forecast that developed market (DM) “risky” assets will make further ground over the next couple of years as the global economy continues to recover from the coronavirus shock and both monetary and fiscal policy remain extremely accommodative. Both the …
21st August 2020
We suspect that the coronavirus-induced local-currency underperformance of MSCI’s Japan and Switzerland indices relative to its USA Index will unwind as the world slowly gets back to normal. To recap, after falling by less in the wake of the coronavirus …
20th August 2020
While we think the US dollar will weaken a bit further this year, suggestions that its role as the world’s primary reserve currency is in jeopardy are wide of the mark in our view. Although it has stabilised a bit over the past couple of weeks, the dollar …
19th August 2020
Although we still think that “risky” assets will make further ground between now and the end of 2022, we no longer expect “safe” government bond yields to rise. We have also become more positive on the prospects for bonds in the euro-zone periphery . Back …
12th August 2020
While risky assets have already rebounded a long way since their lows in March, we think that they will generally make further ground over the coming months, albeit at a slower pace. That view is underpinned by our forecast that the global economy will …
7th August 2020
Argentina and Ecuador’s swift debt restructuring deals may provide a blueprint for other debt-distressed sovereigns. But these deals are not quite the success stories they seem at first sight. In any case, no two restructurings are ever alike, and other …
5th August 2020
Policymakers in a few emerging markets have turned to unconventional monetary policies to combat the economic fallout from the coronavirus pandemic, and some may go further into outright financial repression . This note sets out some of the potential …
31st July 2020
Over the past few months, the euro and the BTP-Bund spread have moved closely together, with the euro strengthening as the BTP-Bund spread narrowed and vice versa. (See Chart 1.) We think that this pattern will persist over the remainder of this year . …
24th July 2020
Although the US dollar has stabilised over the past month or so as fears about a second wave have held back the rebound in risky assets, we continue to think that it will lose further ground over the rest of 2020, unless the resurgence of new cases …
20th July 2020
We don’t think that the valuations of equities in general are particularly stretched. In any case, valuations are like pieces of elastic – they can stretch a lot before they snap. In our view, valuations won’t prevent equities from gaining more ground, …
17th July 2020
While the valuations of emerging market (EM) equities look high relative to their past levels we don’t think that this will necessarily prevent them from rising further, provided that the continued spread of the coronavirus pandemic doesn’t derail the …
15th July 2020
A handful of frontier market governments have issued Eurobonds over the past few months, but these could create vulnerabilities further down the line, particularly in Egypt, Ukraine and Bahrain. Moreover, many frontiers remain locked out of global capital …
14th July 2020
Despite talk of a bubble in “risky” assets, we do not think that their valuations are particularly stretched and will prevent them from gaining further ground over coming months . As the prices of risky assets have continued to recover over the past few …
10th July 2020
While we remain optimistic about the outlook for equities and other risky assets, the rapid increase in new coronavirus cases, especially in the US, poses a key downside risk to our generally optimistic forecasts. As we set out here , our forecasts for …
8th July 2020
News that a major US shale oil producer filed for bankruptcy last week has raised concerns about a new wave of coronavirus-induced corporate defaults. But even if the default rate does pick up in the coming months, we don’t think this will prevent credit …
7th July 2020
We continue to think that central bank backstops make a re-run of the March panic in financial markets unlikely, a key assumption underpinning our view that “risky” assets will recover further ground in the second half of 2020. While equity markets have …
30th June 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
While the euro and many euro-zone assets have rallied significantly over the past two months, we think that there is scope for them to make more headway this year . To recap, during this period the euro has gained ground against the US dollar and is now …
26th June 2020
With monetary policy likely to remain loose for a very long time and the world’s largest economies gradually re-opening, we think that developed market (DM) “risky” assets will continue to recover from their pandemic-induced Q1 slump. To reflect this, we …
24th June 2020
The odds that Joe Biden wins this year’s US presidential election, and that the Democrats also win full control of Congress, have risen recently. While we expect US equities to fare reasonably well over the next few years regardless of the result of the …
22nd June 2020
If we are right that commodity prices will make up more ground as economies continue to reopen, the rally in commodity currencies may have further to go. Australia, Canada, New Zealand and Norway are heavily reliant on exports of commodities (see Chart …
19th June 2020
While much of the rebound in EM currencies is now probably behind us, we think that many of them will rise a bit further against the US dollar as risky assets generally continue to recover. (See Chart 1.) We have revised up our forecasts for many emerging …
17th June 2020
While we think that much of the rebound in emerging market (EM) currencies is now behind us, we still expect that most of them will make a bit more headway against the dollar in the second half of the year. Last week we revised down our forecast for the …
16th June 2020
We now expect that the US dollar will depreciate further as risky assets resume their rebound and the global economy recovers from the coronavirus pandemic. At the start of the year, we forecast that the dollar would strengthen further in 2020 as …
12th June 2020
With monetary policy likely to remain loose for a long time and the world’s largest economies gradually re-opening, our view remains that equity markets will continue to make ground over the coming years. Back in March , when global equities were down by …
11th June 2020
While sovereign bond yields in most developed markets are unlikely to reach new lows and, in our view, will stay around their current levels for some time, local-currency sovereign bond yields in some emerging markets could yet fall further, especially if …
5th June 2020
Strains on the financial system have eased further as central banks have continued to backstop key markets. In our view, their support will remain essential to maintaining that calm and sustaining the recovery in risky assets as economies gradually …
2nd June 2020
Additional stimulus from China strengthens our view that the rebound in equities will continue, especially in emerging markets. But the effect is unlikely to be as big as in 2008-09, and China’s increasingly-tense relationship with the US risks …
29th May 2020
Although the S&P 500’s rally over the past two months is remarkable, we don’t think that it reflects excessive optimism among investors. In our view, equities can rise further from here. The S&P 500 has risen by over 30% from its intraday low on 23 rd …
27th May 2020
While the rally in developed market (DM) equities has lost some steam over recent weeks, we think that they will make up some further ground in the coming months provided that the global economy starts to recover. We suspect that the stock markets with a …
21st May 2020
Although uncertainty about the post-virus prospects for the global economy should continue to support the US dollar, we think that the ongoing recovery in risky assets and the fall in US interest rates will start to pull the currency down from its …
19th May 2020
We don’t think that the recent outperformance of automakers’ equities will continue, even if the global economy starts to recover and equity markets recoup more of their coronavirus-induced losses. Taking a step back, the performance of auto shares has …
15th May 2020
While EM assets, especially in Latin America and EMEA, have been among the worst hit by the fallout from the coronavirus pandemic, we think that they will regain some of the ground lost over the past few months. But even then, we expect that most will end …
13th May 2020
Conditions in money markets have continued to ease gradually as central banks have expanded their backstop measures. In our view, extensive support from policymakers will remain a key factor underpinning the markets for both safe and risky assets for the …
6th May 2020
Even though some economies in Latin America and EMEA are still struggling to contain coronavirus outbreaks and are likely to recover only slowly afterwards, we doubt that their equities will continue to underperform if conditions in the global economy …
5th May 2020
While we remain of the view that the ECB will eventually step up to the plate and increase its purchases of government bonds, concerns about Italy’s debt sustainability and its commitment to the euro mean that we think that the BTP-Bund spread will only …
1st May 2020
We forecast further gains in most risky assets between now and the end of next year. This reflects our expectation of a rebound in economic activity starting in the second half of 2020, alongside the continuation of massive monetary and fiscal policy …
30th April 2020
We suspect that banks’ share prices will rebound a bit from here, after falling a long way. Nonetheless, we don’t think that banks will outperform other sectors significantly, or for long, even if the global economy starts to recover and equity markets …
23rd April 2020
The price/estimated earnings (P/E) ratio of the MSCI USA Index – a benchmark index of mid- and large-cap US equities – recently rose to its highest level since the dot-com era. Nonetheless, we still expect the index to recover a bit more ground this year, …
22nd April 2020
Strains in financial markets are continuing to ease slowly as central banks’ efforts contain the fallout from the pandemic take effect and equity markets rebound on hopes that the spread of the virus is slowing. But vulnerable sovereigns remain in the …
17th April 2020