Global Markets Update Quantitative tightening and Treasury term premia We think upcoming “quantitative tightening” by the Fed will contribute to further increases in the yields of long-dated Treasuries this year and next. 10th February 2022 · 4 mins read
UK Economics Household incomes taking a big hit We estimate that the leap in utility prices and hike in taxes on 1 st April will reduce real household disposable incomes over the next two years by a cumulative £80bn. The resulting 2.0% decline in... 10th February 2022 · 8 mins read
Asset Allocation Update Assessing the risk of contagion from a slump in US equities One of our key calls for 2022 is that mid- and large-cap equities in the US will generally underperform those in other developed markets, and only fare about as well on average as those in emerging... 10th February 2022 · 3 mins read
Capital Daily Is the worst now over for US equities? We do not expect the S&P 500 to surge again following the rebound from its slump in January. Even so, we think that it will make more headway and end 2022 above its current level. 9th February 2022 · 6 mins read
Capital Daily Monetary tightening & the outlook for DM corporate bonds Despite recent increases, we don’t think that corporate credit spreads in the developed world will rise much, in general, over the next couple of years. 8th February 2022 · 5 mins read
Europe Chart Pack Shift in ECB stance poses risks to the bond market Both we and the market are now discounting 100bp of ECB rate hikes by the end of 2023. And given the sequencing set out by Christine Lagarde, it seems likely that net asset purchases will end in Q3... 8th February 2022 · 12 mins read
Capital Daily EM monetary policy and LC government bond yields We don’t think government bond yields in emerging markets outside Asia will continue to rise much more rapidly than those in Asia over the next couple of years. 7th February 2022 · 5 mins read
FX Markets Weekly Wrap The ECB strikes back & US payrolls surprise A week after the FOMC’s hawkish message sent the US dollar soaring, the ECB delivered an even bigger surprise at yesterday’s policy meeting by opening the door to policy rate hikes later this year... 4th February 2022 · 9 mins read
Global Markets Update Earnings optimism may limit the upside for the S&P 500 We doubt the S&P 500 will get much of a boost from upward revisions to earnings forecasts between now and the end of 2022, which is one reason why we expect the index to make only small gains this... 4th February 2022 · 4 mins read
Capital Daily Better news for the US economy than the US stock market Today’s stronger-than-expected US Employment Report (see the US section below) serves as a reminder that good news on the economy isn’t necessarily good news for the stock market. 4th February 2022 · 7 mins read
FX Markets Update Taking stock of the prospects for EM currencies We expect most emerging market (EM) currencies to struggle, despite their strong start to 2022, as commodity prices fall and the Fed seeks to tighten financial conditions. That said, we think that... 4th February 2022 · 4 mins read
Capital Daily Hawkish BoE and ECB point to higher government bond yields Today’s hawkish surprises from both the Bank of England and the ECB reinforce our view that the yields of long-dated government bonds in the UK and euro-zone will rise over the next two years and that... 3rd February 2022 · 7 mins read
Capital Daily Japan and the global bond market sell-off We don’t think Japan’s 10-year government bond yield will rise much further, even as yields elsewhere do so. We expect this to contribute to further weakness in the yen. 2nd February 2022 · 5 mins read
Asset Allocation Update The threat to Treasuries from inflation hysteresis We envisage an end to the markedly better performance of TIPS than Treasuries since inflation compensation rebounded from an initial, liquidity-distorted, slump at the start of the pandemic. But this... 2nd February 2022 · 3 mins read
EM Valuations Monitor Assessing the relative valuations of EM equities Emerging market 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 equities. 1st February 2022 · 8 mins read
Capital Daily Currency market calm & dollar stability may not last Amid a turbulent start to the year in bond and equity markets, currency markets have remained relatively calm, and the US dollar has not gained much despite the FOMC’s increasingly hawkish stance. We... 1st February 2022 · 7 mins read
