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
Global Markets Update Are record “shorts” a new threat to sterling? Non-commercial participants, sometimes described as “speculators”, are now running a record number of short positions in the pound against the dollar, according to US data. However, this alone does... 30th August 2016 · 1 min read
Global Markets Update Should we be concerned about EM equities again? We continue to expect emerging market (EM) equities to rise further in the next couple of years, even as the Fed tightens monetary policy. But the rally has fizzled out in recent days, and we suspect... 24th August 2016 · 1 min read
Global Markets Update Why aren’t the markets more worried about the renminbi? China’s currency continues to weaken and has now fallen by around 7% on a trade-weighted basis this year. But while past episodes of renminbi (RMB) depreciation have rattled global markets, they have... 23rd August 2016 · 1 min read
Global Markets Update Too soon to sound the “all clear” on Brexit risks In the last few days there has been a lively debate in the UK media over whether Brexit ‘Armageddon’ has been avoided. Our view is that it is far too early to say for sure and that sterling in... 22nd August 2016 · 1 min read
Global Markets Update Are Treasuries vulnerable to waning demand from overseas? A sharp increase in the cost of hedging has diminished the appeal of Treasuries to many foreign investors, especially those whose funds are denominated in yen and euros. This is potentially... 16th August 2016 · 1 min read
Global Markets Update China adds to the outperformance of EM equities Whereas the collapse in Chinese equity prices sent global markets into meltdown last summer, they have begun to drive the outperformance of the MSCI Emerging Markets Index in recent weeks. A shift in... 12th August 2016 · 1 min read
