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Today we have revised up our UK GDP growth forecasts. But we still think that the Bank of England will not raise interest rates until 2017 at the earliest. As a result, we anticipate that Gilt yields will remain at unusually low levels for a few years …
7th October 2013
This report is only available as a PDF. Click to download. … US fiscal uncertainty may well drag on throughout this week …
This report is only available as a PDF. Click to download. … Investors likely to maintain their demand for US Treasuries …
4th October 2013
This report is only available as a PDF. Click to download. … Dollar weakness should prove only temporary …
3rd October 2013
This report is only available as a PDF. Click to download. … Investors’ calm over US government shutdown may be short-lived …
2nd October 2013
The rebound in emerging market (EM) equities in September partly reflected the markets’ growing realisation that the Fed is likely to withdraw its monetary stimulus only very slowly. In addition, valuations remain favourable and growth in the major …
1st October 2013
This report is only available as a PDF. Click to download. … Investors complacent about renewed political uncertainty in Italy …
This report is only available as a PDF. Click to download. … US debt-ceiling crisis may shake confidence further …
30th September 2013
This report is only available as a PDF. Click to download. … US equities and government bonds diverge post-Fed …
27th September 2013
With Germany unlikely to alter its hardline approach towards the euro-zone’s more troubled governments following last weekend’s federal election, we doubt that the credit spreads of peripheral euro-zone bonds will contract much further. … Narrowing in …
26th September 2013
This report is only available as a PDF. Click to download. … Fall-out from US debt-ceiling crisis may not be as severe as 2011 …
The recovery in emerging market equities – up almost 6% on average since this time last month – has boosted price/earnings ratios across almost all the major regions. From a historical perspective, valuations still look attractive in EMEA. By contrast, …
25th September 2013
The prospect of a US Federal government shutdown is likely to undermine equity prices further in the coming days, despite the possibility that the resulting uncertainty could prevent the US central bank from tapering its asset purchases at all this year. …
EPFR Global data for July and August suggest that ETF and mutual fund portfolio flows into emerging markets (EMs) may have remained negative in Q3 2013 for the second quarter running amid ongoing concerns about the US Fed’s monetary policy. However, …
24th September 2013
This report is only available as a PDF. Click to download. … Only small gains in store for US equities …
This report is only available as a PDF. Click to download. … Euro-zone peripheral bonds unlikely to benefit from German election …
This report is only available as a PDF. Click to download. … German election unlikely to trigger renewed demand for safe havens …
23rd September 2013
It should only be a matter of time before the recent fall in the number of people losing their job is followed by a rise in the number of people finding a job. Less firing and more hiring is obviously a healthy recipe for faster employment growth, which …
20th September 2013
This report is only available as a PDF. Click to download. … US Treasuries rally after Fed delays QE3 tapering …
We have reviewed our key market forecasts in light of the FOMC’s largely unexpected decision to delay a tapering of its asset purchases. The new numbers are presented in the tables on pages 1 and 2. Most of the changes that we have made are to our …
19th September 2013
This report is only available as a PDF. Click to download. … Can Treasury yields remain low without Fed purchases? …
Strong investor flows into European equities since the start of the year have partly been driven by a perception that valuations are favourable. But while the headline metrics suggest that European equities still appear undervalued from a historical …
18th September 2013
The yield spread of 10-year government bonds in Portugal over German Bunds has increased by about 70bp since this time last month, in stark contrast to a small decrease in the yield spread of 10-year government bonds in Spain. Although the current …
This report is only available as a PDF. Click to download. … Fed will probably announce a small cut in its asset purchases …
This report is only available as a PDF. Click to download. … Positive market reaction to Summers' withdrawal may not last …
17th September 2013
Returns from emerging market equities have been positive since this time last month. Moreover, emerging market equities appear to have stopped underperforming developed market equities. If this continues, it would restore the usual pattern whereby …
16th September 2013
This report is only available as a PDF. Click to download. … Fed is likely to announce a tapering of QE3 …
This report is only available as a PDF. Click to download. … Sterling's rally against the dollar is unlikely to be sustained …
13th September 2013
One of the market’s concerns ahead of the Fed taper is whether there will still be sufficient demand for Treasuries from other investors to prevent a further surge in yields when the US central bank reduces its own purchases. But this risk is probably not …
12th September 2013
Whether at next week’s FOMC meeting or later this year, the Fed will almost certainly decide to scale back its asset purchases in the months ahead. However, Fed tapering is unlikely to be the major shock to the prospects for the rest of the world, or …
11th September 2013
This report is only available as a PDF. Click to download. … Enthusiasm for emerging market equities likely to grow …
This report is only available as a PDF. Click to download. … What’s really been behind the bounce in Japanese equities? …
10th September 2013
The headlines in Japan today have been dominated by the successful Olympics bid, but there will be many decisions with much greater economic and market significance to be taken before 2020 – not least whether to press ahead with the planned doubling of …
9th September 2013
Germany will probably continue to provide temporary support for troubled euro-zone countries but retain an emphasis on austerity after its election later this month. This should minimise the demand for safe havens, such as German Bunds, from a renewed …
This report is only available as a PDF. Click to download. … Mixed Employment Report leaves tapering in the balance …
One criticism levelled at Robert Shiller’s cyclically-adjusted price/earnings ratio (CAPE) is that – for the S&P 500 at least – the denominator has been depressed by accounting changes. This has led some to conclude that US equities are overvalued. But we …
6th September 2013
This report is only available as a PDF. Click to download. … ECB’s dovish outlook puts the euro under pressure …
High hopes are being pinned on interest rate liberalisation to inject some vitality into China’s economy. But the full gains from liberalisation will only be realised if the government is willing to allow state-owned borrowers to fail. This is still far …
5th September 2013
The 10-year US Treasury yield increased even further in July despite reassurances from Fed officials that US monetary policy is likely to remain highly accommodative for a long time. By contrast, the yields of 10-year German Bunds and UK Gilts fell back a …
4th September 2013
The formal introduction of forward guidance by the UK MPC failed to anchor rate expectations in August as the economic data showed continued strength. Indeed, the 2-year overnight-indexed swap rate rose a little more in the UK than in the US, seemingly …
The MPC’s commitment to keep interest rates on hold has failed to prevent the yield on 10-year Gilts rising by more than that on US Treasuries. But we think the difference in monetary policy prospects between the UK and US may soon help Gilts outperform …
This report is only available as a PDF. Click to download. … Will Spanish bond spreads narrow further? …
This report is only available as a PDF. Click to download. … Euro-zone equities are unlikely to hold onto their gains …
3rd September 2013
The surge in the yields of US Treasuries since May has been mirrored, to varying degrees, in most other advanced economies. In contrast, the yields of Japanese government bonds (JGBs) have decoupled again and actually fallen. … How has the Bank of Japan …
2nd September 2013
This report is only available as a PDF. Click to download. … US payrolls may reinforce expectation of September QE3 taper …
Emerging market currencies have come under renewed pressure over the past month and as a result, many now appear quite undervalued. Indeed, of the ten-worst performers since the publication of May’s FOMC minutes, eight now look more attractively valued – …
30th August 2013
This report is only available as a PDF. Click to download. … A recovery in emerging market currencies may be on the cards …
The extent of the latest rout in emerging market currencies has prompted comparisons with previous crises, such as that in the autumn of 2008. But we suspect some recovery may be around the corner. After all, another financial collapse is unlikely and …
29th August 2013
This report is only available as a PDF. Click to download. … Could Western intervention in Syria derail the recovery? …
This report is only available as a PDF. Click to download. … Monetary policy more likely to drive markets than geopolitics …
28th August 2013
