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The valuations of “risky” assets continued to rise in the third quarter, both in absolute terms and relative to “safe” asset yields. We think that reflects the start of the Fed’s easing cycle and renewed optimism about the US economy after initial worries …
10th October 2024
The valuations of “risky” assets have continued to rise, both in absolute terms and relative to “safe” asset yields. We think that reflects the inflation of a bubble in stock markets, itself a consequence of growing enthusiasm about AI technology. But our …
12th July 2024
The valuations of “risky” assets have kept rising so far this year, even as “safe” asset yields have rebounded. While risky asset valuations are quite high by past standards, we doubt this will prevent equities from rising a lot further this year and …
21st March 2024
The valuations of “risky” assets have recovered somewhat lately as “safe” asset yields have tumbled. While we suspect any slowdown in global growth could put risky asset valuations back under pressure in the near term, we think the big picture is that …
19th December 2023
The valuations of “risky” assets have only been undermined a little by the big rise in the yields of “safe” assets in recent months. We think that the valuations of risky assets may fall a bit more in the near term, as growth falters. But further ahead …
2nd October 2023
The continued rise in the valuations of “risky” assets relative to “safe” ones mostly seems to reflect growing confidence in the economic outlook. We think that optimism will be disappointed and that risk premia may rise again – and valuations may fall – …
26th July 2023
While banking sector strains have become less acute over recent weeks, core money markets remain tense as uncertainty grows around the potential fallout from even a temporary default on US Treasuries. Despite the recent failure of First Republic and …
18th May 2023
Click here to read the full report . This revamped Global Markets Valuations Monitor combines and replaces our previous DM Valuations Monitor and EM Valuations Monito r publications. … Global Markets Valuations Monitor (May …
12th May 2023
As the recent breakdown of the UK Gilt market illustrates, policymakers face an increasingly difficult trade-off between combating inflation, supporting economic growth and maintaining financial stability. With core bond and currency markets facing very …
26th October 2022
While the latest change of plans by the UK government takes, in our view, a lot of the upside risk out of Gilt yields, we suspect stubborn risk premia remain that may take some time to fade completely. The latest U-turn in UK fiscal policy seems to have …
18th October 2022
The valuations of euro-zone assets are now very low relative to those in the US, but we don’t think that’s a reason to expect the former to outperform the latter any time soon. The valuation of euro-zone assets has continued to fall over the past few …
15th July 2022
So far, the sell-off across bond and equity markets this year has not triggered major signs of systemic risk. If that were to change, central banks would probably have to step in to prevent a destabilising cycle of panic selling and money market distress …
20th May 2022
We don’t expect ongoing tightening by the Federal Reserve will see the valuations of emerging market (EM) equities or bonds plunge, even if they are unlikely to rebound much either. Sharp rises in bond yields in developed markets this year – amid …
21st April 2022
We suspect the sectors of the equity market where valuations are the lowest will continue to weather the storm of rising bond yields a bit better than others. We highlighted in our previous DM Valuations Monitor how rising bond yields were taking a toll …
12th April 2022
While Russia’s financial markets have unravelled since the country’s invasion of Ukraine, global markets have so far held up relatively well. But the mood seems to have turned a bit in recent days, and there are now some early signs of financial stress …
3rd March 2022
Emerging market (EM) equities’ relatively low valuations may continue to hold them in better stead than equities in the US, but we think they will do less well compared to other developed market (DM) equities. One striking feature of January’s falls in …
1st February 2022
We don’t think the low valuations of emerging market (EM) equity indices relative to those of developed markets (DMs) is reason to expect EM equities to outperform over the next couple of years. Equity market valuations, as measured by price/forward …
18th October 2021
We forecast that the valuation of the US stock market will deflate a bit further over the next couple of years, though we are not expecting a sharp decline . To recap, the valuation of the S&P 500, as measured by its blended 12-month forward …
8th October 2021
While we don’t think that risky assets are in a systemic bubble, we suspect there is limited scope for further large increases in valuations to drive their prices higher over the next few years . Despite the fall in equity markets this week, the …
9th July 2021
While the valuation of the MSCI Emerging Markets (EM) Latin America Index is now low both by past standards and on a relative basis, we think that further gains in the index will be driven mostly by expectations for strong earnings. To recap, the forward …
22nd April 2021
In our view, changes to the economic and policy outlook since the pandemic mean that corporate credit spreads in the US may remain lower than in their recent past for some time. Nonetheless, we see limited scope for them to fall much further from here. …
15th April 2021
While equity markets have fallen sharply over the past two weeks amid worries about the resurgence of new coronavirus cases in Europe and the US, there is little sign of the widespread market dislocations that accompanied the global spread of the pandemic …
2nd November 2020
While sovereign dollar bond spreads in many emerging markets (EMs) are quite high by past standards, we think this is largely justified by the deterioration in fiscal positions caused by the coronavirus crisis . The stripped spreads of JP Morgans’s EMBI …
16th October 2020
The dislocations in financial markets caused by the coronavirus shock have now largely disappeared and, while there may be further bouts of volatility as the global economy continues to recover (such as yesterday’s sell-off in US tech stocks), our view …
4th September 2020
While the valuations of emerging market (EM) equities look high relative to their past levels we don’t think that this will necessarily prevent them from rising further, provided that the continued spread of the coronavirus pandemic doesn’t derail the …
15th July 2020
Despite talk of a bubble in “risky” assets, we do not think that their valuations are particularly stretched and will prevent them from gaining further ground over coming months . As the prices of risky assets have continued to recover over the past few …
10th July 2020
We continue to think that central bank backstops make a re-run of the March panic in financial markets unlikely, a key assumption underpinning our view that “risky” assets will recover further ground in the second half of 2020. While equity markets have …
30th June 2020
Strains on the financial system have eased further as central banks have continued to backstop key markets. In our view, their support will remain essential to maintaining that calm and sustaining the recovery in risky assets as economies gradually …
2nd June 2020
Conditions in money markets have continued to ease gradually as central banks have expanded their backstop measures. In our view, extensive support from policymakers will remain a key factor underpinning the markets for both safe and risky assets for the …
6th May 2020
Strains in financial markets are continuing to ease slowly as central banks’ efforts contain the fallout from the pandemic take effect and equity markets rebound on hopes that the spread of the virus is slowing. But vulnerable sovereigns remain in the …
17th April 2020
Strains in the financial system appear to have eased a little over the past week or so, as policymakers continue to roll out new support measures. Our view remains that while central banks can probably prevent the pandemic from morphing into a full-blown …
3rd April 2020
Although we think that continued support from policymakers will prevent a financial system meltdown that would amplify the economic shock from the coronavirus pandemic, tensions in markets are likely to remain significant until there are signs that the …
25th March 2020
