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
Global Markets Update EM foreign currency debt to perform badly, but crisis unlikely We do not think that the downgrade of the Brazilian government’s foreign currency debt to “junk” status marks the beginning of a systemic emerging market (EM) sovereign debt crisis. But we do expect... 10th September 2015 · 1 min read
Global Markets Update How vulnerable are Treasuries to waning Chinese demand? We don’t see the possibility of China running down its foreign exchange reserves in attempts to support the renminbi as a significant risk to US Treasuries. The links between Chinese demand for... 9th September 2015 · 1 min read
Global Markets Update Which EM currencies are most vulnerable to snap sell-offs? Our Currency Vulnerability Index (Curvi) suggests that the Brazilian real, Turkish lira, South African rand and Colombian peso remain the most exposed emerging market (EM) currencies to snap sell-offs... 9th September 2015 · 1 min read
Global Markets Update Which G-10 commodity currencies remain vulnerable? Four of the worst-performing G-10 currencies since mid-2014 have been those of countries that export large amounts of commodities, namely the dollars of Canada, Australia and New Zealand, and the... 8th September 2015 · 1 min read
Global Markets Update Will corporate debt be the source of the next EM crisis? We think emerging market (EM) dollar-denominated corporate bonds will perform poorly over the coming years, but we do not agree with suggestions that they will be the source of an imminent EM crisis... 2nd September 2015 · 1 min read
Global Markets Update Is the value of everything really too high? To some, the recent sell-off in global financial markets was merely the beginning of what will soon become a much bigger downturn, because the valuations of many assets remain excessively high... 28th August 2015 · 1 min read
