Capital Daily Falling VIX doesn’t have to herald a correction in US equities There may be growing concerns that a correction in the S&P 500 lies around the corner, because the expected volatility of the index has fallen to a pre-pandemic low. This would presumably be because... 8th April 2021 · 5 mins read
Capital Daily India’s monetary policy, bond yields and the rupee We think investors are still overestimating the chances of a significant tightening of Indian monetary policy, and that this will help keep a lid on the country’s long-term bond yields and put some... 7th April 2021 · 5 mins read
Capital Daily Higher corporate taxes creeping up the agenda While any changes to the US tax code may not materialise for many months yet, it seems increasingly clear that the Biden administration intends to pursue its campaign trail pledge to raise corporate... 6th April 2021 · 5 mins read
Capital Daily Growing evidence of a sustained increase in US inflation A continuation of expansionary fiscal policy and today’s ISM figures out of the US support our view that core inflation there will exceed the Fed’s expectations over the next few years. 1st April 2021 · 6 mins read
Capital Daily Real yields and gold The latest pull-back in the price of gold to below $1,700/oz. has illustrated its greater sensitivity to US long- than short-dated real yields. We expect the price to fall further as the US real yield... 30th March 2021 · 5 mins read
Capital Daily We expect US & E-Z government bond yields to diverge further We expect a further divergence in both economic performance and central bank policy between the US and the euro-zone to cause the gap between ten-year government bond yields in the two regions to... 29th March 2021 · 5 mins read
Capital Daily We don’t expect China’s stock market to stage a big rebound We aren’t surprised that China’s stock market has been under pressure lately, and don’t anticipate it will rebound significantly over the rest of the year. 25th March 2021 · 5 mins read
Capital Daily The recovery in the US dollar may have further to run We expect the US dollar to end this year a bit stronger against most other DM currencies, as bond yields rise by more in the US than elsewhere. We think that the greenback will make some of its... 24th March 2021 · 6 mins read
Capital Daily First few months of 2021 may set the tone for the rest of this year It is a year today since global equities generally bottomed out after COVID-19 sent shockwaves through financial markets. The markers in Chart 1 shows the returns since 23rd March 2020 from the 19... 23rd March 2021 · 6 mins read
Capital Daily Contagion from Turkey sell-off will remain limited in our view The sell-off in Turkish assets and the lira sparked by President Erdogan’s decision over the weekend to sack the central bank (CBRT) governor Naci Agbal is likely to continue over the coming weeks in... 22nd March 2021 · 5 mins read
Capital Daily BoJ review points to divergence between central banks While the Bank of Japan’s adjustments to its policy framework have limited near-term market implications, we think they are illustrative of differing central bank outlooks that will ultimately lead to... 19th March 2021 · 7 mins read
Capital Daily What to make of the steepening US real yield curve The renewed sell-off in the Treasury market since the conclusion of yesterday’s FOMC meeting may seem hard to square with the message that monetary policy is likely to remain very loose for a long... 18th March 2021 · 6 mins read
Capital Daily The Fed, EM central banks and the outlook for EM LC bonds We think that the Fed’s next moves will be key to the outlook for emerging market (EM) local currency government bonds. 17th March 2021 · 7 mins read
Capital Daily We don’t expect the euro to weaken much further against US$ We think that the recent widening of the yield spread of 10-year US Treasuries over German Bunds will not continue. With this in mind, we expect the euro to regain some of the ground it has recently... 16th March 2021 · 5 mins read
Capital Daily Monetary policy, economic growth and bond yields In our view, as the pandemic eases 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... 15th March 2021 · 6 mins read
Capital Daily Flashbacks to May 2013? Unlike during 2013’s “Taper Tantrum”, we think that Fed policy will prevent a further sell-off in US Treasuries from leading to a broad-based rout in “risky” assets anytime soon. 12th March 2021 · 7 mins read
