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The collapse in oil prices has prompted concerns that many sovereign wealth funds (SWFs) will be forced to liquidate their vast holdings of financial assets, thereby putting further pressure on market prices. While not entirely unfounded, we think these …
19th January 2016
This report is only available as a PDF. Click to download. … How slowly is China’s economy growing? …
18th January 2016
This report is only available as a PDF. Click to download. … Are 10-year US Treasury yields heading back below 2%? …
15th January 2016
It might seem surprising that the UK stock market has outperformed its peers recently, given the ongoing pressure on commodity prices. After all, the share of firms in commodity sectors is relatively large in the UK. This can mainly be explained by the …
This report is only available as a PDF. Click to download. … Commodities more likely than sterling to boost UK equities …
14th January 2016
The S&P 500 has shown signs of stabilising after a terrible start to the year. Many expect this to be a lull in the storm. But while there are at least eight reasons to be fearful of a major correction in the stock market, we doubt that one will actually …
13th January 2016
This report is only available as a PDF. Click to download. … Lots of reasons to fear a stock market crash that is unlikely to occur …
The equity bears have latched on to two recent developments in the US stock market. However, we don’t see either as a signal of its impending collapse. … Two worrying signals for the US stock …
After peaking in mid-November, sterling has fallen nearly 5% on a trade-weighted basis, making it the worst performing major currency bar the Canadian dollar over this period. The weakness will be welcomed by British manufacturers, who today reported a …
12th January 2016
This report is only available as a PDF. Click to download. … Sterling likely to fall further against the dollar, but not the euro …
The yen has been the strongest of the major currencies since the end of November. Not only has Japan’s currency benefited from the recent turmoil in global financial markets, but it has also been boosted by diminished expectations of further monetary …
11th January 2016
This report is only available as a PDF. Click to download. … We doubt the strength of the yen will persist …
This report is only available as a PDF. Click to download. … Muted reaction to “goldilocks” payrolls …
8th January 2016
The performance of US corporate bonds since the end of November has been poor. For example, the average yield of seasoned issues rated Baa by Moody’s has increased nearly 10bp, extending its gain since last February to around 120bp. It is not surprising …
This report is only available as a PDF. Click to download. … Oil prices to recover, but $100 shouldn’t be seen again this decade …
7th January 2016
The latest sell-off in equity markets in the emerging world is largely due to bad communication by the People’s Bank of China. Indeed, with many emerging market (EM) economies showing some signs of improvement , we still think that equities will perform …
An increase in Moody’s seasoned Baa-rated US corporate bond yield preceded all seven recessions that have taken place in the US in the past fifty years. What’s more, in six of those cases, the increase in the yield preceded a decline in the stock market …
This report is only available as a PDF. Click to download. … Authorities in China back on the defensive …
6th January 2016
Renewed intervention by the authorities in China may not be enough to prevent further falls in local equity markets, but even in the event of a sell-off the macroeconomic consequences should be small and any related losses in global markets quickly …
Emerging market (EM) equities fared poorly in 2015, with the MSCI Emerging Markets Index falling by 8% in local currency terms and lagging behind the MSCI World Index of developed market equities for the third year running. However, this has left the …
5th January 2016
This report is only available as a PDF. Click to download. … Should we be alarmed by the rise in US corporate credit spreads? …
This report is only available as a PDF. Click to download. … Does the latest slide in EM equities set the tone for 2016? …
4th January 2016
2015 was a year to forget for most investors. Commodities were routed ... again . Equities struggled, especially in emerging markets. And bonds generally failed to shine. There should be more to cheer in 2016, though, at least when it comes to commodities …
The inauguration of President Mauricio Macri has brought about a shift towards more orthodox economic policymaking in Argentina. Over a decade of populist and interventionist macroeconomic policy has left the economy with an over-valued exchange rate, a …
22nd December 2015
The better-than-expected showing from Podemos in Sunday’s general election looks likely to usher in a period of political uncertainty in Spain, which could lead to an anti-austerity government in the eurozone’s fourth largest economy. Nonetheless, we …
This report is only available as a PDF. Click to download. … How will Spain’s election affect its bond market? …
18th December 2015
A combination of fading fears over China and additional yen weakness, as the Bank of Japan steps up the pace of its asset purchases, should allow Japanese equities to outperform their US peers in 2016, as they have done for most of the last three years. …
The US stock market has reacted positively to the first rate hike by the Fed, and we don’t expect it to be derailed by the onset of further tightening. Admittedly, at around 4%, the cyclically-adjusted earnings yield is low relative to its long-run …
17th December 2015
This report is only available as a PDF. Click to download. … Post-Fed rally a sign of things to come …
The positive reaction of many riskier assets to Fed “lift-off” supports our view that they will perform well in 2016. … Will markets continue to react well to Fed rate …
This report is only available as a PDF. Click to download. … Last thoughts ahead of expected Fed lift-off …
16th December 2015
This report is only available as a PDF. Click to download. … First Fed hike shouldn’t be a game-changer (even for gold) …
15th December 2015
With 2016 looming large, this Global Markets Update contains 10 of our key market calls for the year ahead. … 10 key calls for 2016 …
14th December 2015
This report is only available as a PDF. Click to download. … Where are markets headed next year? …
This report is only available as a PDF. Click to download. … PBOC buys some more insurance against further dollar strength …
11th December 2015
A widely-anticipated Fed rate hike next week would probably not cause panic in financial markets. However, our view that the Fed will eventually raise rates faster than expected leads us to conclude that further weakness in the euro and yen lies ahead, …
After failing to live up to its own hype last week, we would not be surprised if the ECB is forced to increase its monthly asset purchases after all next year. But even if it does, we think that the yields of longer-dated German Bunds will edge higher. … …
This report is only available as a PDF. Click to download. … South African markets likely to remain weak …
10th December 2015
Most emerging market (EM) asset classes have underperformed their peers in developed markets so far this year. Plenty of downside risks remain going into 2016, but we continue to think that EM markets will perform reasonably well in the months ahead. … …
9th December 2015
This report is only available as a PDF. Click to download. … Broad-based squeeze on margins to weigh on the US stock market …
This report is only available as a PDF. Click to download. … Will the slump in emerging market equities reverse? …
8th December 2015
The renewed slump in emerging market (EM) equities perhaps calls into question our view that they will perform well in 2016/17. But the latest declines have been driven by a fall in commodity prices and more disappointing news from China, neither of which …
The broad-based strength of the last two US employment reports has seen investors reassess the outlook for US monetary policy. Investors now expect the federal funds rate to rise at a faster pace than they did one month ago, which has underpinned the rise …
7th December 2015
This report is only available as a PDF. Click to download. … How will the US corporate bond market handle Fed tightening? …
This report is only available as a PDF. Click to download. … The outlook for US Treasuries remains poor …
4th December 2015
Today’s US Employment Report bolsters our view that the future stance of Fed policy will put upward pressure on Treasury yields over the next couple of years. … US Treasuries remain exposed to tighter Fed …
This report is only available as a PDF. Click to download. … Oil price could jump if OPEC fails to accommodate Indonesia …
3rd December 2015
This report is only available as a PDF. Click to download. … How might markets react to further ECB easing? …
2nd December 2015
Fed tightening may dampen demand for emerging market (EM) dollar-denominated government bonds in the next couple of years, but with spreads over US Treasuries already high we do not expect a major sell-off. … Dollar-denominated bonds primed for …
