Global Markets Update A brighter outlook for EM local currency bonds We continue to expect the yields of 10-year emerging market (EM) local currency (LC) sovereign bonds to rise over the rest of 2022. But we anticipate smaller rises than we did previously, given our... 1st August 2022 · 2 mins read
Middle East & North Africa Economics Update Egyptian pound has a lot further to fall Spillovers from the war in Ukraine have caused Egypt’s large current account deficit to widen this year and, with the country struggling to attract stable forms of external financing, officials will... 1st August 2022 · 3 mins read
FX Markets Weekly Wrap Dollar struggles on market’s hope of a Powell pivot The dollar looks set to lose further ground this week after the FOMC’s 75bp hike was, somewhat strangely, interpreted as the start of a dovish pivot and US Q2 GDP disappointed. However, the greenback... 29th July 2022 · 9 mins read
Capital Daily What a stronger yen could mean for the US stock market The surge in the yen against the dollar seems to be a logical, but delayed, response to a shrinking gap between US and Japanese government bond yields. In the wake of big revisions to our forecasts... 29th July 2022 · 7 mins read
UK Economics Weekly Gilt yields to rebound, economics point a Lionesses win If our forecasts that Bank Rate will rise to 3.00% and that high inflation will prevent the Bank of England from cutting interest rates during the coming recession both prove right, then 10-year gilt... 29th July 2022 · 4 mins read
Global Markets Update Reassessing our forecasts for US markets We still expect a higher 10-year Treasury yield, lower S&P 500 and stronger US dollar over the remainder of the year, but have pared back our forecasts for the rise in yields and fall in equities. In... 29th July 2022 · 6 mins read
UK Markets Chart Pack Fall in gilt yields won’t last, equities to trough sooner Given our forecast that the Bank of England will raise interest rates from 1.25% now to a peak of 3.00%, we still think that gilt yields have further to rise. However, with attention in the markets... 29th July 2022 · 9 mins read
India Economics Weekly More left in the locker The drop in FX reserves to the lowest level in almost two years has raised concerns in some quarters that the RBI’s policy of FX intervention to slow the depreciation of the rupee is not sustainable... 29th July 2022 · 5 mins read
FX Markets Valuations Monitor Overvaluation may limit further strength in the USD We estimate that, in aggregate, the US dollar has become more overvalued over the past few months. In our view, this is because fundamentals in the US relative to other major economies have not... 29th July 2022 · 14 mins read
Japan Economics Weekly Bank of Japan won’t widen tolerance band any further Long-term bond yields have dropped back in recent weeks which meant that the Bank of Japan had to work less hard to defend its 10-year yield target. Given that we no longer expect US 10-year Treasury... 29th July 2022 · 5 mins read
Capital Daily This is (probably) not the Powell pivot markets are looking for Financial markets have taken the combination of yesterday’s FOMC’s announcement and today’s negative US GDP print as confirmation that policymakers will ease off their aggressive monetary tightening... 28th July 2022 · 7 mins read
Emerging Europe Chart Pack Growth outlook darkens The economic outlook has deteriorated across the region. Inflation is soaring and monetary conditions are tightening, which is weighing on households’ real incomes and spending power. The latest... 28th July 2022 · 11 mins read
BoE Watch Stepping up the fight We expect the Monetary Policy Committee (MPC) to step up its fight against high inflation at its meeting on Thursday 4 th August by raising interest rates by 50 basis points (bps), from 1.25% to 1.75%... 28th July 2022 · 9 mins read
China Chart Pack Housing crisis flares up again The mortgage boycotts are a double threat to developers and to the housing market. They have drawn attention to the problem of cash-strapped developers being unable to complete properties that they... 27th July 2022 · 11 mins read
Capital Daily For EM financial markets, bad news is just bad news We expect weak global growth to keep the pressure on EM sovereign bonds over the rest of 2022, and think that most EM currencies will weaken against the US dollar over this period. 27th July 2022 · 5 mins read
US Economics Update Recession Watch (Jul.) While the deterioration in the survey data and renewed inversion of the Treasury yield curve imply that the risks are rising, our composite models suggest that the economy is still more likely than... 27th July 2022 · 4 mins read
