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
Global Markets Update Investors may be underestimating eventual rate cuts How low Fed and ECB policy rates will go, when they are eventually normalised, is at least as important for financial markets as the precise timings of the ends of tightening cycles, in our view. We... 16th June 2023 · 4 mins read
Global Markets Update Rate cuts may not be a big boost for EM local-currency bonds We think an upcoming shift in emerging market monetary policy towards rate cuts will provide long-dated local-currency government bonds there with a bit of a tailwind. But gains may be limited in the... 13th June 2023 · 4 mins read
Global Markets Update Euro-zone bond yields may have already peaked While we anticipate that the ECB will deliver more rate hikes this year, we don’t think that this would trigger another leg up in long-term euro-zone government bond yields. In fact, we suspect that... 8th June 2023 · 5 mins read
Emerging Europe Economics Update Turkey needs a significant adjustment in the lira Signs that newly re-elected Turkish president Erdogan is willing to move away from unorthodox economic policies has led to an increase in investor optimism towards his country. These developments are... 7th June 2023 · 4 mins read
Global Markets Update The outlook for equities after the debt ceiling deal The resolution of the debt ceiling debate has cleared a cloud that was hanging over the US equity market, but we think a darker one – a growth slowdown – still lingers. That’s why we doubt the rest of... 6th June 2023 · 4 mins read
