Global Markets Update The kiwi can fly! New Zealand dollar to remain high It is tempting to conclude that the New Zealand dollar is set to fall sharply. After all, on several measures, it is the most overvalued of the G10 currencies. But with the key driver behind the... 18th March 2014 · 1 min read
Global Markets Update Are markets complacent about Ukraine? Given the twin threats from worries about a “hard landing” in China and the crisis in Ukraine, it is perhaps surprising that global equities have not already fallen more than they have. We think that... 14th March 2014 · 1 min read
Global Markets Update Winners and losers from safe-haven demand The continued recovery in the price of gold confirms that it has retained its safe-haven status despite the slump in the first half of last year. We expect further gains. Less positively, yen strength... 12th March 2014 · 1 min read
Global Markets Update What are the relative prospects for euro-zone and US bonds? The risks of deflation in the euro-zone, particularly in light of the ECB’s continued inaction last Thursday, should keep the yields on ten-year core euro-zone government bonds well below those on US... 11th March 2014 · 1 min read
Global Markets Update Is the UK MPC's new forward guidance working? On the face of it, “phase two” of the Monetary Policy Committee’s (MPC’s) forward guidance appears to have been a success. After all, yields have fallen since it was introduced. But upon closer... 6th March 2014 · 1 min read
Global Economics Update How much could financial sanctions on Russia hurt the West? If the crisis in Ukraine escalates further, the West seems more likely to impose limited financial sanctions against Russia than to target trade in goods, especially energy. Some Russian officials... 5th March 2014 · 1 min read
Global Markets Update What will be the wider fallout from conflict in Ukraine? The crisis in Ukraine has the potential to have a further significant and prolonged impact on global financial markets, even though our current judgement is that the fallout is likely to be short... 3rd March 2014 · 1 min read
Global Markets Update Low valuation of emerging market assets unlikely to persist The valuations of many emerging market assets are now at multi-year lows relative to those of developed markets. While there remain a number of reasons to be cautious about the outlook for emerging... 27th February 2014 · 1 min read
Global Markets Update Will Spain’s and Italy’s bond spreads continue to fall? The yield spreads of Spanish and Italian government bonds over German Bunds began to fall sharply following the announcement of the ECB’s Outright Monetary Transactions programme in the summer of 2012... 27th February 2014 · 1 min read
Global Markets Update Weaker euro should help euro-zone equities to outperform One development that is likely to cap future rises in long-term government bond yields in some of the major advanced economies is the persistence of exceptionally loose monetary policy. But this is... 26th February 2014 · 1 min read
Global Markets Update Some calm returns after January’s exodus In January, net selling of emerging market securities by global ETFs and mutual funds was larger than in any month since last June according to EPFR Global. But timelier daily data from six stock... 26th February 2014 · 1 min read
Global Markets Update Will a shift in Fed policy send profits into a tailspin? A rise in borrowing costs triggered by less accommodative monetary policy is likely to have an adverse effect on the profits of increasingly-indebted US companies. But we doubt margins will collapse. 24th February 2014 · 1 min read
Global Markets Update Outlook for US equities is brighter than for bonds We think US equities are set to fare better than bonds in the coming years. The outperformance is likely to be less than the historical average. But we still think it could be quite substantial. 19th February 2014 · 1 min read
Global Markets Update Stock market valuation – should we adjust for payout policy? One argument made by US equity bulls is that Shiller’s cyclically-adjusted price/earnings ratio (CAPE) exaggerates the extent to which the stock market is overvalued because it does not account for a... 13th February 2014 · 1 min read
Global Markets Update What difference will revamped forward guidance have on Gilts? The Bank of England looks set to overhaul its forward guidance as part of tomorrow’s Inflation Report. But we doubt a revamped version will have a greater influence on the pricing of Gilts than the... 11th February 2014 · 1 min read
Global Markets Update Is it right to blame Fed tapering for the EM sell-off? Many equity investors will be happy to see the back of January, but several lessons are worth underlining. In short, the gradual scaling back of the Fed’s asset purchases alone still seems unlikely to... 3rd February 2014 · 1 min read