Global Markets Update Three thoughts on the US credit rating downgrade The US government losing another one of its “AAA” ratings after Fitch Ratings’ downgrade decision this week is more symbol than substance. But three key related points are worth highlighting. 4th August 2023 · 5 mins read
Global Markets Update Soft landing tailwind for “risky” assets may fade We suspect the boost to “risky” assets from the resilience of the economy may have mostly run its course. 4th August 2023 · 4 mins read
Emerging Markets Economics Update Lessons from the early EM interest rate cutters The key points that stand out from the recent moves by central banks in Brazil, Chile and Hungary to cut interest rates are, first, how quickly policymakers have shifted from hawkish to dovish and... 3rd August 2023 · 4 mins read
Global Markets Update The implications of El Niño for global markets We think El Niño poses downside risks to the prices of emerging market assets, in general. But even if the effect in aggregate wasn’t all that large, there are several vulnerable sectors where such an... 3rd August 2023 · 4 mins read
FX Markets Update Effective end of YCC adds to the case for a stronger yen The BoJ’s decision earlier today to, in effect, end its long-standing Yield Curve Control (YCC) policy means that long-term government bond yields in Japan will become more responsive to economic... 28th July 2023 · 4 mins read
Global Markets Update The US yield curve could stay inverted for a while yet The Treasury yield curve has been inverted for a long time by past standards, but we think it could remain so until next year even if there’s a recession in the interim. 21st July 2023 · 4 mins read
Global Markets Update Why Gilt yields and sterling may have further to fall Despite today’s big reaction in markets in the UK to better-than-expected inflation news, we still think investors are overestimating the peak in interest rates there and underestimating how much... 19th July 2023 · 5 mins read
Global Markets Update When & why the stock market has ridden out a recession The stock market in the US has rarely rallied in recessions that have taken place there since the mid-1850s. Our forecast is that it will take a knock amid a recession in H2 2023 before powering ahead... 14th July 2023 · 4 mins read
Global Markets Update How markets might fare as US disinflation continues June’s soft US CPI print seems to have given investors renewed hope that inflation could fall back to normal levels without the economy slowing too much, if at all. We continue to think that the... 13th July 2023 · 3 mins read
Global Markets Update Why don’t TIPS yields matter anymore? Not so long ago, a higher 10-year TIPS yield almost invariably meant an underperformance of US “growth” stocks vis-à-vis their “value” peers, a lower gold price, and a stronger dollar. That’s changed... 13th July 2023 · 5 mins read
Global Markets Update Canada & ANZ bonds no longer look like such outliers We still think the yields of long-dated sovereign bonds in Canada, Australia and New Zealand will fall by the end of this year, but no longer expect them to do so by much more than the yields of bonds... 7th July 2023 · 7 mins read
Global Markets Update US corporate bond spreads may rise again Corporate credit spreads have fallen back in the US over the past couple of weeks, while they have risen in the euro-zone and the UK. However, given our pessimistic view of the US economy, we suspect... 5th July 2023 · 4 mins read
Asset Allocation Update Making sense of asset flows and the yen Reconciling the slide in Japan’s currency with big flows into its stock market from abroad and a perception that the appeal of foreign bonds to Japanese investors has waned in response to high hedging... 30th June 2023 · 4 mins read
Global Markets Update High Treasury volatility won’t prevent yields from falling Treasury volatility has fallen over recent weeks but remains high by historical standards, and we wouldn’t be surprised if it remained so over the rest of 2023 even after the Fed has concluded its... 21st June 2023 · 3 mins read
Global Markets Update Revising up our S&P 500 forecasts We don’t think growing enthusiasm about AI will be enough to stop the S&P 500 from declining if, as we expect, the US economy falls into recession later this year. Nonetheless, we now think the index... 20th June 2023 · 3 mins read
Asset Allocation Update Bubbles, recessions, & AI We now suspect growing euphoria over AI will drive the S&P 500 to a significantly higher level than we had previously forecast by the end of next year. In the meantime, though, we still think a mild... 16th June 2023 · 4 mins read
