DM Valuations Monitor Is the US dollar now overvalued? According to the Peterson Institute for International Economics (PIIE), the US dollar now looks “fundamentally” overvalued. However, valuations can stretch a long way before they snap, and other... 19th November 2015 · 1 min read
DM Valuations Monitor Is the New Zealand dollar still overvalued? The Peterson Institute for International Economics (PIIE) is likely to update its estimates of fundamental equilibrium exchange rates (FEERs) next month. We suspect that these will show that the New... 9th October 2015 · 1 min read
DM Valuations Monitor Are US equities significantly overvalued? Comparing Robert Shiller’s well-known cyclically-adjusted price/earnings ratio(CAPE) to its long-run average suggests the US stock market is currently significantly overvalued. However, we don’t think... 17th September 2015 · 1 min read
DM Valuations Monitor Where is the value in US Treasuries? The renewed plunge in the yield of 10-year US Treasuries over the past month cannot be attributed to a reassessment of investors’ expectations for the path of the federal funds rate, according to the... 13th August 2015 · 1 min read
DM Valuations Monitor How vulnerable are US equities to tighter Fed policy? Some see tighter monetary policy as the biggest threat to the US stock market. But its onset did not have a major effect during the last three major Fed tightening cycles. What’s more, the fact that... 23rd July 2015 · 1 min read
DM Valuations Monitor Treasuries vulnerable to a reassessment of Fed policy The path of the federal funds rate that is implied by the yields of US Treasuries is much gentler than the one that we project. This leads us to forecast that the 10-year yield will end 2015 higher... 19th June 2015 · 1 min read
DM Valuations Monitor Will the yen remain undervalued? On several metrics, the yen appears to be the most undervalued major developed market currency: on a purchasing power parity basis and when its real effective exchange rate (REER) is compared to both... 22nd May 2015 · 1 min read
DM Valuations Monitor What is the relative valuation of euro-zone equities? The stock market in the euro-zone is much more attractively valued than in the US based on a comparison of cyclically-adjusted price/earnings (CAPE) ratios. However, its valuation is much less... 16th April 2015 · 1 min read
DM Valuations Monitor Will the New Zealand dollar remain overvalued? The New Zealand dollar’s real effective exchange rate (REER) is currently almost 18% above its average of the past ten years. On this metric it has been one of the most overvalued developed market... 17th March 2015 · 1 min read
DM Valuations Monitor Sterling’s strength unlikely to last Sterling has been one of the few major currencies to appreciate against the US dollar over the past month. As a result the real effective exchange rate is now around 5% above its ten-year average and... 19th February 2015 · 1 min read
DM Valuations Monitor Swiss franc most overvalued DM currency after surge? The surge in the Swiss franc that followed the abandonment of the Swiss National Bank’s exchange rate ceiling against the euro means it is now the most overvalued of all the developed market (DM)... 16th January 2015 · 1 min read
DM Valuations Monitor Is the Norwegian krone now undervalued? Although the Norwegian krone is on course to be the worst performing G-10 currency this year, having depreciated by almost 20% against the US dollar since January, we doubt that it is now... 18th December 2014 · 1 min read
DM Valuations Monitor Is the CAPE giving a false signal about euro-zone equities? The gap between cyclically-adjusted price/earnings ratios (CAPE) for the non-financial sectors of the US and euro-zone stock markets – using Shiller’s method – has climbed from below zero in May 2008... 19th November 2014 · 1 min read
DM Valuations Monitor Credit spreads in Italy and Spain are likely to rise further The average yield spread of 10-year Italian and Spanish sovereign bonds over German Bunds has surged by almost 20 basis points over the past month. We suspect that it may rise further. One reason for... 22nd October 2014 · 1 min read
DM Valuations Monitor Yet another distortion in US stock market valuation This Thursday, the Federal Reserve will publish its latest Financial Accounts of the United States for Q2. These are likely to show that the market value of equities issued by US non-financial... 15th September 2014 · 1 min read
DM Valuations Monitor Is sterling really overvalued? When comparing sterling’s real effective exchange rate to its ten-year average,the currency appears to be around 12% overvalued – which is the largest degreeof misalignment among the developed market... 14th August 2014 · 1 min read
