US Economics Update Loss of US AAA rating shouldn't be a complete disaster The news that S&P finally pulled the trigger by cutting America's long-term credit rating from AAA to AA+ will surely rock the financial markets when they open on Monday. But any spike in Treasury... 6th August 2011 · 1 min read
Global Markets Update Essential points on the US debt crisis The US debt crisis will clearly dominate the agenda in the coming week, so it is worth summarising and expanding on the points we have made so far. In short, we continue to think that the Federal... 30th July 2011 · 1 min read
Global Markets Update What would a US downgrade mean for the dollar? The dollar is initially likely to weaken further if the US loses its AAA credit rating. But we would still expect the US currency to rebound and end the year higher against the euro, sterling and yen. 29th July 2011 · 1 min read
US Economics Update What if the US defaults? We still think that the US government is unlikely to default on its debt. But if it did, the implications would potentially be far more serious than those that would follow a one or two notch... 26th July 2011 · 1 min read
US Economics Update What if the US loses its AAA rating? A downgrade of US government debt would not necessarily be disastrous for Treasuries or the dollar, at least once the dust settled. However, it would be the starkest warning yet that the fall-out from... 23rd July 2011 · 1 min read
Global Markets Update What next for the Swiss franc? Most of the world’s major “paper” currencies have fallen out of favour. But the Swiss franc is an exception to the rule. It has even outperformed gold since the start of the year. We expect the upward... 20th July 2011 · 1 min read
Global Markets Update Would a US sovereign credit downgrade rattle Treasuries? Moody’s has become the second major rating agency to put the long-term credit rating of the US government on review for possible downgrade. We think investors in the Treasury market were right to... 15th July 2011 · 1 min read
Global Markets Update Are the best days for German Bunds behind us? German Bunds have prospered from the escalating crisis in the euro-zone. Earlier this week, the 10- year yield briefly hit 2.5% – a new low for the year – before edging up again to 2.7% now. Our base... 14th July 2011 · 1 min read
Global Markets Update US stock market rally unlikely to last The S&P 500 closed above 1,300 yesterday for the first time since early June and is now about 4% higher than its level at the beginning of the year. There are plenty of optimists who expect the stock... 1st July 2011 · 1 min read
Global Markets Update Can China solve the euro-zone’s problems? Despite warm words of support from China’s leaders, there is no reason to believe that China has the ability to solve the euro-zone’s debt crisis. We estimate that China has already bought more than... 28th June 2011 · 1 min read
Global Markets Update Would Chinese reserve diversification hurt the dollar? Recent data provide tentative evidence that China’s accumulation of foreign exchange reserves has significantly outpaced her net purchases of US government securities in recent months. This... 23rd June 2011 · 1 min read
Global Markets Update New forecasts for the US dollar We have revised our expectation of a large rebound in the value of the dollar. Although we still think some appreciation against the other “majors” is likely by the end of next year, we now forecast... 16th June 2011 · 1 min read
Global Markets Update What next for Japan's stock market? Overseas investors appear to have lost their appetite for Japanese equities after a lengthy buying spree. This has presumably been due to the continued underperformance of Japan’s stock market despite... 6th June 2011 · 1 min read
Global Markets Update Plenty of life left in the Treasury market rally The yield on 10-year Treasuries has fallen below 3% for the first time this year and by more than 60bp since early April. To some, this rally must inevitably come to an end soon. After all, the Fed’s... 2nd June 2011 · 1 min read
Global Markets Update How long is healthy profit growth likely to last? US corporate profits expanded at an annualised rate of just over 5% in Q1, following an increase of nearly 10% in the prior quarter. Margins were boosted by renewed downward pressure on unit labour... 26th May 2011 · 1 min read
Global Markets Update Yen likely to weaken sharply again The renewed appreciation of the yen over the past month has encouraged speculation that the Japanese currency will revisit the post-war record intraday high of 76.25 to the dollar seen on 17th March... 11th May 2011 · 1 min read