Global Markets Update Reassessing currency misalignment The Peterson Institute for International Economics (PIIE) is likely to publish its latest semi-annual estimates of fundamental equilibrium exchange rates (FEERs) next month. We suspect that these will... 9th October 2015 · 1 min read
Global Markets Update What do the new COFER data tell us about China’s reserves? China appears to hold a larger than average share of its fx reserves in US dollars, UK pounds and Australian dollars at the expense of euros and the Japanese yen. This is the conclusion we have... 2nd October 2015 · 1 min read
Global Markets Update Few winners from weak US payrolls The disappointing US jobs report for September will clearly do little to improve investor confidence in the global economy. Yes, it will probably delay the first interest rate hike from the Fed until... 2nd October 2015 · 1 min read
Global Markets Update Does competitiveness influence EM stock market performance? The progress on structural reforms made by many emerging market economies over the past year bodes well for the performance of their stock markets over the long run. And although other factors are... 30th September 2015 · 1 min read
Global Markets Update Will China fuel a recovery in German automobile shares? While the emissions scandal has been responsible for the recent plunge in the share price of Volkswagen Group, the bigger picture is that the share prices of German car manufacturers have been sliding... 29th September 2015 · 1 min read
Global Markets Update Fed hike still coming soon (which should be good news) Fed Chair Janet Yellen used a speech last night to send a pretty clear signal that US interest rates are still likely to be raised later this year, despite the hesitancy last week. This shouldn’t be a... 25th September 2015 · 1 min read
Global Markets Update Euro-zone peripheral government bonds remain vulnerable The rise in sovereign credit spreads in the euro-zone since the spring has partly reflected concerns about the implications of the slowdown in China and US monetary policy, rather than just specific... 24th September 2015 · 1 min read
Global Markets Update Which EM equity markets suffer most at the hands of China? Emerging market equities have suffered heavy losses from the recent bout of risk aversion that has been “Made in China”, particularly those in commodity-exporting countries. But with the economy... 23rd September 2015 · 1 min read
Global Markets Update We don’t expect very low Treasury yields to last A decline in the equilibrium level of the federal funds rate provides some justification for lower long-term US Treasury yields today than on average in the past. But a large decline in the... 22nd September 2015 · 1 min read
Global Markets Update Brazilian real hits 4/$, unlikely to snap back We think that the sell-off in the Brazilian real has been overdone to some degree. But whereas a decline to around 4/$ in 2003 was subsequently followed by a period of rapid appreciation, several... 22nd September 2015 · 1 min read
Global Markets Update Financial market implications of the Fed’s inertia The FOMC’s decision to leave its target range for the federal funds rate unchanged has triggered a rally in government bonds and weakness in the dollar, which in turn has weighed on equities in the... 18th September 2015 · 1 min read
Global Markets Update Does State intervention in equity markets really work? Earlier this week the Malaysian authorities joined their Chinese counterparts in intervening in the equity market, but there is little evidence that such policies are effective. Global pressures will... 17th September 2015 · 1 min read
Global Markets Update Staying in tune with stock market valuation With the debate about the valuation of the US stock market continuing to rage, one factor which is often overlooked is the importance of choosing the correct long-term average with which to compare... 16th September 2015 · 1 min read
Global Markets Update What to expect from EM markets when the Fed pushes the button We still think there is a good chance that US interest rates will be raised tomorrow. But whether “liftoff” is this week or later, emerging market assets and currencies are unlikely to go into... 16th September 2015 · 1 min read
Global Markets Update Four reasons not to put much store by Shiller’s CAPE By comparing the current level of Robert Shiller’s well-known cyclically-adjusted price/earnings ratio (CAPE) with its long-run average, the equity bears assert that the US stock market is vastly... 15th September 2015 · 1 min read
Global Markets Update Japanese equities to outperform US as monetary policies diverge Provided the panic over China subsides, we expect the yen to slide further and the Nikkei to surge as the Bank of Japan steps up the pace of its asset purchases, perhaps as soon as next month. 15th September 2015 · 1 min read