Global Markets Update Will rising corporate bond yields put pressure on US equities? The earnings yield of a stock market index should be closely related to the average real yield of long-dated bonds issued by its constituents. In the US, we think the latter is likely to rise... 13th November 2013 · 1 min read
Global Markets Update Market implications of a shift in the Fed’s financial repression There is growing speculation that when the Fed eventually announces a tapering of its asset purchases, it will simultaneously lower its unemployment rate threshold. A commitment to keep rates lower... 11th November 2013 · 1 min read
Global Markets Update Will the Fed taper be a game-changer? The question of exactly when the US Fed will start to taper its asset purchases under QE3 has understandably been the focus of much analysis and speculation (including by ourselves). There are six... 5th November 2013 · 1 min read
Global Markets Update Limited upside for the US stock market The US stock market has performed strongly since the end of August, with the S&P 500 posting a total return of nearly 9%. However, we think the index will struggle to make further headway and forecast... 5th November 2013 · 1 min read
Global Markets Update Monetary and fiscal outlook points to further yen weakness The Bank of Japan is likely to maintain its current policy settings at its Board meeting tomorrow. But in contrast to the US Fed, the question is whether the Japanese central bank will eventually have... 30th October 2013 · 1 min read
Global Markets Update Don't write off the dollar The crisis over the debt ceiling, the prospect of “QEternity”, and some recent evidence that foreign investors have been selling US assets have all revived talk that the dollar is facing a prolonged... 25th October 2013 · 1 min read
Global Markets Update Will the euro-zone recovery lift equity earnings? The depressed level of euro-zone aggregate corporate earnings largely reflects the weakness of the region’s economy. While we continue to think that the recovery in GDP will be unspectacular, a... 24th October 2013 · 1 min read
Global Markets Update Equities back in favour EPFR Global data reveal that ETF and mutual fund portfolio flows into emerging market (EM) equities were positive in September for the first month since February. And separate daily data from six... 18th October 2013 · 1 min read
Global Markets Update Debt-ceiling crisis has done lasting damage The lukewarm market reaction to the end of the US government shutdown and the suspension of the debt ceiling can largely be explained by the fact that the chances of default were already assumed to be... 17th October 2013 · 1 min read
Global Markets Update Loss of AAA ratings embarrassing, but probably little more The chaos in Washington has left the US at greater risk of losing its remaining AAA credit ratings even if an imminent default is avoided. However, while this would be a political embarrassment, the... 16th October 2013 · 1 min read
Global Markets Update How vulnerable are foreign investors to a default on Treasuries? Expectations were growing on Tuesday that US lawmakers would soon reach an agreement to extend the debt ceiling before the Treasury runs out of cash. But there is still an outside chance that a deal... 15th October 2013 · 1 min read
Global Markets Update What impact would a US default have on Treasuries? In the event of the US government failing to service its debts, there are some good reasons to argue that Treasury yields would jump and others to suggest that they would actually fall. Our view is... 14th October 2013 · 1 min read
Global Markets Update Markets remain sanguine about risks of US default Despite all the understandable concerns, market pricing suggests that most investors are still fairlyrelaxed about the chances that the US government will default on its debt. As it happens, we think... 9th October 2013 · 1 min read
Global Markets Update Nikkei set to outperform again Japanese equities have dropped further than their peers so far this month and are among the most vulnerable to the fall-out from a potential US government default. Nonetheless, once the debt-ceiling... 9th October 2013 · 1 min read
Global Markets Update Gilt yields to remain low despite strengthening UK economy Today we have revised up our UK GDP growth forecasts. But we still think that the Bank of England will not raise interest rates until 2017 at the earliest. As a result, we anticipate that Gilt yields... 7th October 2013 · 1 min read
Global Markets Update Will emerging market equities continue to recover? The rebound in emerging market (EM) equities in September partly reflected the markets’ growing realisation that the Fed is likely to withdraw its monetary stimulus only very slowly. In addition... 1st October 2013 · 1 min read
