Global Markets Update Is the latest jump in EM “junk” bonds sustainable? The rally in emerging market (EM) “junk” bonds has continued unabated in recent days, but we think that this year’s strong gains may soon go into reverse. That alone would probably be enough to cause... 25th October 2016 · 1 min read
Global Markets Update How will money market changes affect US government bonds? Following the implementation of new US money market regulations on Friday, US interbank rates might fall back a bit. While this could prompt some renewed demand for long-term Treasuries from foreign... 18th October 2016 · 1 min read
Global Markets Update What might a Trump win mean for the US dollar? The heightened economic and geopolitical uncertainty that would follow a victory for Donald Trump in November’s US presidential election would surely see the dollar weaken against traditional safe... 10th October 2016 · 1 min read
Global Markets Update How vulnerable are bonds to a shift in monetary policy? It is sometimes argued that government bond yields in the advanced economies have been driven down to very low levels by exceptionally loose monetary policy and that yields are bound to soar once... 5th October 2016 · 1 min read
Global Markets Update Reform progress provides healthy backdrop for EM equities Most emerging market (EM) countries have made further progress on implementing structural reforms in the past year. While this broad increase in competitiveness supports our view that EM stock markets... 29th September 2016 · 1 min read
Global Markets Update Are investors underestimating EM credit risks? Both the BIS’s latest report and our own risk indicator continue to highlight high levels of debt as a key risk in China, but we think investors are right to judge that the threat of a credit event in... 29th September 2016 · 1 min read
Global Markets Update Economics, not elections, the key to US equity performance The outcome of forthcoming elections in the US is unlikely to have a major bearing on the performance of its stock market, if history is a useful guide. Economics will matter more than politics. 26th September 2016 · 1 min read
Global Markets Update Market implications of the BoJ’s policy changes Rather than loosen policy outright on Wednesday, the Bank of Japan (BoJ) made changes to its existing policy framework, some of which are designed to lessen side effects on the financial sector. It is... 21st September 2016 · 1 min read
Global Markets Update Should we be concerned about bonds in Asia? The stripped spreads of dollar-denominated government bonds in Asia are nearing the lows seen prior to both the Asian and Global Financial Crises, but we do not think this signals that another major... 20th September 2016 · 1 min read
Global Markets Update What are US OIS rates really telling us about future Fed policy? US overnight indexed swap (OIS) rates have been driven down by a confluence of factors, some of which are unrelated to expectations for conventional monetary policy. As a result, caution should be... 16th September 2016 · 1 min read
Global Markets Update Making sense of higher asset valuations Although the valuations of bonds and equities are higher than their long-run averages, we don’t think sharp falls in their prices are likely. This is because we believe their equilibrium valuations... 13th September 2016 · 1 min read
Global Markets Update Why this isn’t the beginning of the end for EM equities We have warned for some time that emerging market (EM) equities will be more volatile as attention turns back to the Fed. Momentum may yet drive stocks lower in the near term, but we continue to... 12th September 2016 · 1 min read
Global Markets Update Time to dump the junk? Yet another scaling back of investors’ expectations about Fed policy has breathed new life into the rally in emerging market (EM) “junk” bonds. But we suspect that the best days are now behind them... 9th September 2016 · 1 min read
Global Markets Update Are EM equity valuations really too high? Overly pessimistic projections for earnings of emerging market (EM) corporations mean that the price/12month forward earnings ratios of equity markets appear to be artificially high. Admittedly, EM... 8th September 2016 · 1 min read
Global Markets Update Market implications of a possible shift in the policy mix With monetary stimulus approaching its limits, fiscal stimulus could soon become more fashionable. What would be the effect of such a shift in the policy mix on bonds, currencies and equities? 7th September 2016 · 1 min read
Global Markets Update Is a stable stock market a sign of trouble ahead? The low level of the VIX index has led some to conclude that investors are being complacent about the risk of a major correction in the S&P 500. However, the fact that expected volatility is low by... 31st August 2016 · 1 min read