DM Valuations Monitor Treasuries vulnerable to rising term premiums Continuing the pattern seen this year, the decline in the yield of 10-year Treasuries over the past month appears to have resulted from a fall in the term premium according to one set of unofficial... 14th July 2014 · 1 min read
DM Valuations Monitor How overvalued is the US stock market? At almost 26, the level of Shiller’s 10-year cyclically-adjusted price/earnings ratio (CAPE) is currently more than 65% above its average since 1881. But the CAPE is inflated because reported earnings... 18th June 2014 · 1 min read
DM Valuations Monitor How strong is the euro? The euro does not appear to be significantly overvalued despite the ECB’s concerns about its strength. The real effective exchange rate (REER) is equal to its ten-year average and only slightly above... 16th May 2014 · 1 min read
DM Valuations Monitor Is there a bubble in the US tech sector? Much of the recent pull-back in the US stock market appears to have reflected a concern that valuations in the technology sector are frothy. But we are a long way from the situation that prevailed at... 14th April 2014 · 1 min read
DM Valuations Monitor New Zealand kiwi likely to remain overvalued The real effective exchange (REER) rate of the New Zealand dollar is around 20% higher than its average over the past ten years. But we are forecasting only a small depreciation in the kiwi, even as... 17th March 2014 · 1 min read
DM Valuations Monitor Relative valuation of Japanese equities at 30-year low The earnings multiple of equities in Japan has fallen sharply since the start of the year. In contrast, those of the US have held broadly steady. The upshot is that the 12-month trailing price... 18th February 2014 · 1 min read
DM Valuations Monitor Are euro-zone government bonds favourably valued? Government bond yields have continued to fall in much of the euro-zone in response to improving economic conditions. Spreads over German Bunds have fallen to multi-year lows in many nations. But... 14th January 2014 · 1 min read
DM Valuations Monitor Credit ratings influence stock price valuations There is significant cross-country variation in the price/earnings ratios of euro-zone stock markets. This variation appears to be at least partly justified by differences in the average credit... 15th November 2013 · 1 min read
DM Valuations Monitor Core Europe now viewed as safer than the US The debt ceiling crisis has made it more expensive to insure against a default by the US government than the German or UK governments. (See Chart.) However, this development has not prevented long... 16th October 2013 · 1 min read
DM Valuations Monitor Portuguese government bonds come under fire The yield spread of 10-year government bonds in Portugal over German Bunds has increased by about 70bp since this time last month, in stark contrast to a small decrease in the yield spread of 10-year... 18th September 2013 · 1 min read
DM Valuations Monitor Low valuations fuel euro-zone outperformance Euro-zone equities have staged something of a revival so far in the second half of 2013, returning over 10% and outperforming US equities. Relatively low valuations have probably played an important... 16th August 2013 · 1 min read
