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
Global Markets Update How to interpret the Nikkei-yen correlation There have recently been few relationships which are more reliable than the tight correlation between the level of the Nikkei and the yen/dollar exchange rate. We are wary of simply extrapolating a... 29th January 2014 · 1 min read
Global Markets Update Can EM equities shrug off rising Treasury yields? One reason for the current nervousness in emerging markets (EMs) is of course the Fed's decision to begin tapering its asset purchases. However, suggestions that EM equities will inevitably struggle... 28th January 2014 · 1 min read
Global Markets Update Fall-out from emerging market instability should be short-lived Although some currencies have fallen sharply this month, it still does not seem right to talk about a new financial crisis sweeping across all emerging markets (EMs). What’s more, the economic... 27th January 2014 · 1 min read
Global Markets Update Are we seeing a re-run of the summer sell-off? The sell-off in emerging market (EM) assets following the Fed’s decision to taper its asset purchases in December has prompted comparisons with last summer’s turmoil. But while the latest data from... 27th January 2014 · 1 min read
Global Markets Update What next for emerging market dollar-denominated bonds? Dollar-denominated emerging market (EM) government bonds fared badly in 2013. The JP Morgan EMBI+ returned around minus 8%, which was the second worst annual performance since 1998. While we do not... 16th January 2014 · 1 min read
Global Markets Update Fed tightening risks to grow over the medium term We continue to expect the Fed to taper its asset purchases only gradually and to keep US interest rates on hold near zero until mid-2015. Nonetheless, thereafter we expect the Fed to return rates to... 14th January 2014 · 1 min read
Global Markets Update Would structural reform reinvigorate EM stock markets? One explanation for the relatively poor performance of emerging market (EM) equities has been the economic slowdown in many countries. But while supply-side structural reforms are needed to... 13th January 2014 · 1 min read
Global Markets Update The global implications of further monetary easing in Japan An extended period of ultra-loose monetary policy and additional asset purchases by the Bank of Japan should have some (mostly) positive spill-over effects into world markets this year and next... 9th January 2014 · 1 min read
