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As earnings season kicks off today in the US, we think that investors remain too optimistic about the global outlook for earnings per share (EPS) growth, given the prospects for the world economy. That is the key reason why we forecast stock markets …
12th April 2019
We think that euro-zone stock markets will generally fall in the rest of 2019 as global growth remains weak and appetite for risk wanes. Equities in Germany and Italy will fare particularly poorly, in our view, as the downturn in global trade continues to …
This report is only available as a PDF. Click to download. … Second Brexit delay keeps sterling in limbo …
11th April 2019
Equities in the US have continued to rise in the past month, but the recent inversion of parts of the Treasury yield curve and weak economic data doesn’t bode well for the US stock market. We forecast that the S&P 500 will fall sharply over the rest of …
10th April 2019
This report is only available as a PDF. Click to download. … Bund yields and the euro are likely to fall much further this year …
Although the Fed’s dovish shift is likely to continue, we are sticking with our pessimistic view of the outlook for EM sovereign dollar bonds. That is because we expect credit spreads to rise sharply later this year, as hopes that the recent soft patch in …
This report is only available as a PDF. Click to download. … Tougher times ahead for EM currencies …
9th April 2019
This report is only available as a PDF. Click to download. … Earnings season the first real test for this year’s equity rally …
8th April 2019
This report is only available as a PDF. Click to download. … Rise in US payrolls does not alter our bullish view of Treasuries …
5th April 2019
We think that the best-performing countries in the MSCI EM Index so far this year will end up nearer the bottom of the class over the rest of 2019. That is because we expect the key factors driving the recent rally in global equities, namely optimism …
This report is only available as a PDF. Click to download. … More scope for disappointment than delight on trade …
4th April 2019
Our downbeat view of the US economy is at odds with analysts’ upbeat assessment of S&P 500 earnings per share (EPS). This is a key reason why we forecast that the index will drop back sharply later this year. … Faltering earnings likely to take a toll on …
This report is only available as a PDF. Click to download. … Weaker US growth spells trouble for corporate bonds and stocks …
3rd April 2019
While we think that interest rates will be cut in Canada, Australia and New Zealand over the next couple of years, we suspect that this will be more of a boost to their government bonds than a drag on their currencies. Nonetheless, we still expect the …
2nd April 2019
This report is only available as a PDF. Click to download. … Risk appetite, not monetary policy, likely to drive $/€ down …
We have revised down our already-bearish end-2019 forecast for the euro against the US dollar. Nonetheless, we still think that the exchange rate will bounce back in 2020 as looser monetary policy in the US and elsewhere rekindles investors’ appetite for …
This report is only available as a PDF. Click to download. … Scale of the rally in China’s equities hard to justify …
1st April 2019
This report is only available as a PDF. Click to download. … Investors still sitting on the fence, as May’s deal defeated again …
29th March 2019
The yields of 10-year government bonds in Germany, Switzerland and Japan have edged up after touching 2½-year lows earlier this week. But we doubt that they will rebound as fast, or as far, as they did in 2016. … “Safe” bond yields may stay low for longer …
We are not surprised that EM currencies have weakened against the dollar over the past week, and expect them to fall further by the end of the year. Three features of the latest sell-off help to shed some light on how things might evolve from here, and …
Frontier market currencies have fared better than their emerging market counterparts during the recent market turmoil. But their balance sheets are generally much weaker, making currencies vulnerable to large falls. Indeed, some of the biggest declines we …
28th March 2019
This report is only available as a PDF. Click to download. … Yield curve inversion suggests S&P 500 may have peaked already …
This report is only available as a PDF. Click to download. … “Distortions” don’t change the yield curve’s gloomy message …
27th March 2019
We think that the recent inversion of parts of the US Treasury yield curve is a bad sign for the S&P 500, which we expect to fall sharply over the rest of this year as growth in the US economy disappoints. … What bonds are telling us about equities in the …
26th March 2019
This report is only available as a PDF. Click to download. … A new phase for the US stock market may be here to stay …
Given the prospects for monetary policy, we forecast that that the rally in government bonds will continue in the US; run out of steam in Germany and Japan; and reverse in the UK if a “no-deal” Brexit is avoided. … Prospects for government bonds remain …
25th March 2019
This report is only available as a PDF. Click to download. … Bond yields likely to remain low, or fall further this year …
This report is only available as a PDF. Click to download. … Euro likely to fall further in 2019, before rebounding in 2020 …
22nd March 2019
We are now more hawkish than the consensus about the outlook for monetary policy in Norway this year. But we don’t expect the krone to keep strengthening, as we forecast that oil prices will fall. … Monetary policy likely to prevent weaker …
Although EM currencies suffered as the Fed tightened last year, they have hardly benefitted from the central bank’s dovish shift recently, including after this week’s FOMC meeting. We forecast that most will weaken over the rest of this year, even as the …
21st March 2019
Although investors have become more dovish about the outlook for US monetary policy in the wake of this week’s FOMC meeting, we think that they are underestimating future rate cuts given the grim outlook for the US economy. So in our view, there is more …
This report is only available as a PDF. Click to download. … Investors banking on an unrealistic “soft landing” in the US …
We expect bonds in the euro-zone’s “periphery”, particularly in Italy, to come under renewed pressure in the rest of 2019 as growth remains weak and political risks creep up. However, we think that credit spreads will tighten again in 2020, as central …
20th March 2019
This report is only available as a PDF. Click to download. … 10yr UST yield likely to fall further, as the Fed turns more dovish …
Growing safe-haven flows in 2019 and the ECB re-starting its net asset purchases in 2020 may mean that the yields of “core” European government bonds (EGBs) fall further over the next two years. … The 10-year Bund yield may be heading to …
This report is only available as a PDF. Click to download. … Rally in euro-zone peripheral bonds unlikely to last …
19th March 2019
This report is only available as a PDF. Click to download. … The market implications of a shift in EM monetary policy …
18th March 2019
Although sterling could continue its ascent this week if PM May can get closer to squeezing her deal through Parliament, our best guess is that the next big leg up in the currency will occur after 29th March. … Next big leg up in sterling most likely …
This report is only available as a PDF. Click to download. … Looser BoJ policy unlikely to prevent stronger yen this year …
15th March 2019
The rally in EM assets of the past few months has started to falter in recent days on the back of some poor economic data around the world, and signs that a US-China trade deal may be further away than previously thought. We forecast that EM assets will …
14th March 2019
This report is only available as a PDF. Click to download. … Limited upside for euro-zone equities if no-deal Brexit is avoided …
Although UK MPs are unlikely to vote in favour of pursuing a no-deal Brexit tonight, that would not rule it out altogether. This Update considers the potential consequences of no deal for euro-zone markets. … The euro-zone market response to a no-deal …
13th March 2019
This report is only available as a PDF. Click to download. … Further upside for sterling likely to be limited for now …
This report is only available as a PDF. Click to download. … Barring “no deal”, Brexit to remain a sideshow for most markets …
12th March 2019
The real return from US equities in the coming decade could plausibly be less than a third of what it has been in the last ten years. Even so, that would probably still be more than the real return from Treasuries. … A blockbuster decade for US equities …
We forecast that the MSCI EMU Index will fall by another 13% this year as the US joins China and the euro-zone in an economic slowdown. Nonetheless, a resolution to the trade war could see equities in the euro-zone fall by less than those in the US. Our …
The surge in China’s mainland equity markets since the start of the year looks excessive, even allowing for renewed optimism about stimulus in China and the possibility of a US-China trade deal. Since we are anticipating more economic weakness in both …
11th March 2019
This report is only available as a PDF. Click to download. … Rebound in S&P 500 unlikely to last …
This report is only available as a PDF. Click to download. … US employment report supports our bearish view of equities …
8th March 2019
We remain more dovish than investors about the outlook for interest rates in the euro-zone. But we still think that “risky” assets there will perform badly this year, as slowing global growth takes its toll. … Market implications of the outlook for ECB …
