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
Global Markets Update Treasuries – who will fill the void left by the Fed? The Federal Reserve’s second round of quantitative easing (QE2) ends next month. Last November, the FOMC announced that the Fed would purchase an extra $600bn in US government bonds by th middle of... 10th May 2011 · 1 min read
Global Markets Update Profits of doom The growth rate of US domestic corporate profits has outstripped the growth rate of the US economy significantly since the end of the Great Recession. However, corporate profits are now coming under... 9th May 2011 · 1 min read
Global Markets Update Inflation fears to fade as commodity prices slide This week’s sharp falls in commodity prices of all types may have been exaggerated by wild speculation but are mostly consistent with our view of the economic fundamentals. 6th May 2011 · 1 min read
US Economics Update Hard to argue with negative outlook on US AAA credit rating Given the size of the US Federal deficit, which will be close to 10% of GDP this year, and the daunting medium-term fiscal challenges, it is hard to argue with S&P's decision to put a negative outlook... 18th April 2011 · 1 min read
Global Markets Update End of QE2 may not be a big deal for emerging markets The conclusion of the Fed’s second round of Treasury purchases is unlikely to be the major turning point for emerging market equities and bonds that many anticipate. Global financial conditions and... 12th April 2011 · 1 min read
Global Markets Update Silver to follow gold to all-time high The recent surge in the price of silver largely represents catch-up with gold after three years of underperformance. This phase of rapid catch-up is probably now drawing to an end. Nonetheless, the... 11th April 2011 · 1 min read
