Global Markets Update Global Markets Update - Has the "Brexit" storm already passed? Not surprisingly, the outcome of yesterday’s referendum in the UK has hit sterling hard and driven down the prices of equities and most commodities. At the same time, it has boosted the “safe-haven”... 24th June 2016 · 1 min read
Global Markets Update What might a ‘Brexit’ vote mean for the yen? The yen would presumably jump on safe-haven demand in response to a UK vote to leave the EU, but we would still expect the Japanese currency to end the year much weaker against the dollar. Indeed... 22nd June 2016 · 1 min read
Global Markets Update Vote for Brexit may prove to be a damp squib There are good reasons to believe that the market fireworks after a UK vote to leave the EU (‘ Brexit ’) would not be as dramatic as many expect. Indeed, while the initial impact on the pound would... 16th June 2016 · 1 min read
Global Markets Update Causes and consequences of a lower US equity risk premium Several factors have probably reduced the equilibrium level of the equity risk premium (ERP) in the US to a level that is well below its long-run average. Partly as a result, the stock market is... 7th June 2016 · 1 min read
Global Markets Update Can EM equities continue to outperform? In contrast to equities in developed markets, those in emerging markets (EMs) have rallied since Friday’s disappointing US Employment Report caused investors to scale back their expectations for Fed... 6th June 2016 · 1 min read
Global Markets Update What are the risks for EMs? The wobble in financial markets in the emerging world since investors began to reassess the outlook for US monetary policy in May has been much smaller than in the past. The Fed, along with renewed... 2nd June 2016 · 1 min read
Global Markets Update A fresh look at currency misalignment The Peterson Institute for International Economics (PIIE) recently published its latest semi-annual estimates of fundamental equilibrium exchange rates (FEERs). These suggest that the Colombian peso... 1st June 2016 · 1 min read
Global Markets Update Will “A-shares” make the grade and would it matter? Were China’s “A-shares” to be included in the MSCI Emerging Markets Index it may not be the big deal that some expect. A-shares would probably only be dripped into the Index, while the outlook for... 31st May 2016 · 1 min read
Global Markets Update More musings on US and European equities As we noted in our Global Markets Update, “How do the valuations of US and European equities stack up?”, which was published on Monday, the stock market in the US can be considered either to be... 26th May 2016 · 1 min read
Global Markets Update Renminbi weakness needs to be seen in perspective The renewed slide in the renminbi against the US dollar may revive concerns about a broad-based devaluation of the Chinese currency. However, as we have argued before, context is everything, and here... 25th May 2016 · 1 min read
Global Markets Update Will EM currencies underperform as the Fed hikes? Emerging market (EM) currencies have not always underperformed during Fed tightening cycles and we do not expect them to do so this time, even as US rates rise further than is generally anticipated 25th May 2016 · 1 min read
Global Markets Update Would Brexit really be a game-changer for global markets? The trends in the opinion polls and in bookmakers’ odds suggest that a UK vote to leave the EU (“ Brexit ”) would now be a major surprise. Given this, the initial uncertainty caused by Brexit would... 23rd May 2016 · 1 min read
Global Markets Update How do the valuations of US and European equities stack up? Is the stock market in the US overvalued or undervalued relative to its counterpart in Europe? The answer largely depends on which metric is chosen and how earnings evolve. 23rd May 2016 · 1 min read
Global Markets Update What if the Fed does hike again in June? Our central forecast is that US interest rates will be raised twice this year, probably in September and December, but we suspect that the chances of a hike on 15th June are rather higher than the 30%... 19th May 2016 · 1 min read
Global Markets Update Will “other forces” keep US Treasury yields down? US Treasury yields continue to be depressed by other forces besides the expectation that the federal funds rate will remain very low in the future. Some of these forces are likely to persist over the... 18th May 2016 · 1 min read
Global Markets Update Will rising Treasury yields rattle EMs next year? We now think that the 10-year US Treasury yield will rise by about 100bp in 2017. Nonetheless, unlike previous occassions when it has risen sharply, we doubt that it will lead to a crisis in emerging... 17th May 2016 · 1 min read