Global Markets Update Bank of Japan running out of room to surprise On Friday the Bank of Japan is widely expected to announce another large increase in purchases of JGBs under its Asset Purchase Program (APP). Indeed, some commentators appear to believe that Japan’s... 25th April 2012 · 1 min read
Global Markets Update Turn in the US profit cycle looms US corporate profits have grown significantly in the nearly three years since the end of the last recession. Admittedly, there are structural reasons why the share of profits in corporate output may... 17th April 2012 · 1 min read
Global Markets Update Weather won't keep US natural gas prices down for long The bulk of the decline in the price of US natural gas, from $6 per million British thermal units (MMBtu) early in 2010 to around $3 at the start of 2012, can be explained by the surge in supply. But... 16th April 2012 · 1 min read
Global Markets Update Bunds increasingly vulnerable to erosion of safe haven status German government bonds are still regarded as a safe haven, allowing them to benefit from concerns about the global economy and the rolling crisis in the periphery of the euro-zone. Some of the... 12th April 2012 · 1 min read
Global Markets Update Are markets heading for a repeat of 2011? The recent slump in global equities is prompting comparisons with 2011, when the prices of riskier assets also fell away after a confident start. Our view is that the US economy will be more resilient... 11th April 2012 · 1 min read
Global Markets Update Are markets heading for a repeat of 2011? The recent slump in global equities is prompting comparisons with 2011, when the prices of riskier assets also fell away after a confident start. Our view is that the US economy will be more resilient... 11th April 2012 · 1 min read
Global Markets Update New forecasts for bond and stock markets We have revised our projections for the major Western government bond and stock markets, and for emerging markets, partly to reflect changes to our US economic forecasts and partly due to reduced... 14th March 2012 · 1 min read
Global Markets Update A stronger yen likely to undermine Japan’s stock market Japan’s stock market has been on a roll. We do not expect the good times to last. Although we are revising up our end-2012 and end-2013 forecasts for the Nikkei 225 slightly, to 7,750 (versus 7,500... 27th February 2012 · 1 min read
Global Markets Update New forecasts for the yen The yen has fallen to its lowest level against the dollar in more than six months, with the exchange rate now just a whisker below 80. The principal catalysts for the weakening of the currency have... 21st February 2012 · 1 min read
Global Markets Update Has the US equity risk premium reached a peak? Part of the justification provided in some quarters for the recent rise in the US stock market is that equities are attractively valued relative to bonds. We do not dispute this fact – the equity risk... 16th February 2012 · 1 min read
Global Markets Update Gilts unimpressed by £50bn more QE, but outlook still rosy Gilt yields bounced on Thursday after the UK MPC announced a £50bn planned increase in the size of its Asset Purchase Programme (APP) to £325bn. While this presumably reflected disappointment in some... 9th February 2012 · 1 min read
Global Markets Update Too soon to call the end of the bull market in Treasuries Reduced fears of a meltdown in the euro-zone and the recent run of better economic data – culminating in January’s unequivocally strong US payrolls report – have led to speculation that the long bull... 6th February 2012 · 1 min read
Global Markets Update US Treasuries to benefit from more than just Fed policy The relatively subdued response of US Treasuries to the outcome of Wednesday’s FOMC meeting underlines the fact that while monetary policy should provide a firm anchor for long-term yields over the... 26th January 2012 · 1 min read
Global Markets Update A deepening liquidity trap would be bad news for equities Writing in today’s Financial Times, Gavyn Davies argues that “nominal equity returns may be held back by low inflation but in real terms they should outperform government bonds, even if the liquidity... 25th January 2012 · 1 min read
Global Markets Update What next for the euro? The euro fell below $1.27 against the dollar again on Wednesday – close to its lowest level since the autumn of 2010. We do not think its slide is over. Both the relative prospects for monetary policy... 11th January 2012 · 1 min read
Global Markets Update US stock market at risk from the earnings cycle The fourth quarter US corporate earnings season kicks off today. The reporting season is unlikely to be especially upbeat as the profits cycle is now peaking. Looking ahead, the growth rate of profits... 9th January 2012 · 1 min read