Capital Daily Assessing the risks to our positive view on Italian sovereign bonds While the increasing likelihood of a Draghi-led government in Italy has reduced the risk that domestic political turmoil will push up the BTP-Bund spread, it is still possible that a deterioration in... 11th February 2021 · 6 mins read
Capital Daily Buoyant market mood should continue to support EM currencies We think emerging market currencies will resume appreciating against the US dollar before long, even if yields of US government bonds continue to rise a bit. 10th February 2021 · 5 mins read
Capital Daily Three features of the recent stock market rally The MSCI World Index of developed market (DM) equities has risen by ~6% since COVID-19 vaccination programmes started in early December and hit another record high yesterday. While the magnitude of... 9th February 2021 · 5 mins read
Capital Daily What to make of the greenback’s rebound The US dollar has started 2021 on the front foot and, while we still think that it will eventually resume its downward trend, the risks around that forecast have shifted in favour of the currency. 8th February 2021 · 4 mins read
Capital Daily We expect US real yields to stay low The weakness in the US labour market in January revealed by the latest payrolls data is likely to prove temporary, but we still would not expect Treasury yields to rise very sharply from here. And we... 5th February 2021 · 7 mins read
Capital Daily We think the 10-year gilt yield and sterling may rise a little further The Bank of England’s policy announcement on Thursday was in line with our expectations and provides further support to our view that the 10-year gilt yield will probably rise a little further this... 4th February 2021 · 5 mins read
Capital Daily ECB probably more important than Draghi for BTPs A successful outcome to Mario Draghi’s attempt to form a new government in Italy would probably be good news for the country’s sovereign bonds (BTPs). But even if the current political crisis drags on... 3rd February 2021 · 7 mins read
Capital Daily We expect loose monetary policy to keep a lid on bond yields The RBA’s decision earlier today to extend its bond purchases, despite considerable improvement in the economic outlook, is just the latest sign that major central banks are likely to take a much more... 2nd February 2021 · 5 mins read
Capital Daily We think the rise in Indian bond yields may prove short lived Indian government bond yields have increased sharply following the government’s budget announcement earlier today, but we suspect they will fall back before long. 1st February 2021 · 6 mins read
Capital Daily We expect the US dollar to weaken further this year We think the recent deterioration in risk appetite explains much of the US dollar’s strength this week, but we expect its downward trend will eventually resume. 29th January 2021 · 7 mins read
Capital Daily US Treasuries & equities: squaring the circle For much of the past year, loose monetary policy has been the fuel that has kept the US stock market’s fire burning bright. It might seem odd then that the S&P 500 fell yesterday by the most in a day... 28th January 2021 · 6 mins read
Capital Daily Weighing up the risks to Treasuries from future tapering It seems very unlikely that the FOMC will unnerve the bond market later today by signalling a tapering of its asset purchases (see here). But even when the time for such an announcement does come, we... 27th January 2021 · 6 mins read
Capital Daily Echoes of the dotcom bubble? One of the salient features of the biggest US stock market bubble of modern times, which burst in 2000, was that it inflated especially rapidly during its final stage. To what extent is something... 26th January 2021 · 5 mins read
Capital Daily Weighing up US corporate bonds and equities The valuation of the US stock market appears much less stretched relative to that of the US corporate bond market than it did in the late 1920s and at the turn of the last century. 25th January 2021 · 5 mins read
Capital Daily We expect further positive rotation in equity markets Ongoing virus woes in many developed markets haven’t put much of a dent in the equity market rotation that has happened since the good news about vaccines emerged in November. We expect that rotation... 22nd January 2021 · 7 mins read
Capital Daily We expect ECB support to push peripheral yields down further While Christine Lagarde sounded slightly more hawkish than expected at the press conference following today’s ECB meeting, we still expect central bank support to drive “peripheral” government bond... 21st January 2021 · 7 mins read
