Tag Archives: Global Economics

Appetite for destruction… and procrastination

Financial markets continue to take into their stride a number of man-made and natural crises and the procrastination of policy-makers in the US, UK and Eurozone.

Global risk appetite remains seemingly well bid despite the still very opaque end-game for rising geopolitical tensions stemming from North Korea and the impact from Hurricanes Harvey and Irma.

In the world of FX, the emerging market carry trade is seemingly enjoying a mini-revival thanks to low yields in developed economies, signs that global GDP growth continues to inch higher and a surge in commodity prices, particularly industrial metals.

Event risk is clearly more acute in September than it was in August but it is not obvious to me that major central banks will deliver the kind of surprises which cause major dislocations in financial markets, including EM currencies.

However, these high-yielding EM currencies’ volatility versus the Dollar remains quite elevated, with perhaps the exception of the Turkish Lira and Indian Rupee.

Chinese policy-makers are seemingly intent, at least for now, on using Renminbi appreciation as a show of strength and I expect further currency gains near-term.

In the UK, the mammoth challenge facing Prime Minister Theresa May is coming into greater focus. Moreover, the Bank of England is unlikely to seriously consider a rate hike before next year, in my view.  With this in mind, I see the risk biased toward bouts of Sterling weakness.

The Euro, which eked out small gains versus the Dollar and Sterling following ECB President Draghi’s Q&A session, is ultimately behaving like a safe-haven currency.

I expect the common currency to benefit, not suffer, from lower interest rates for longer and the associated improvement in economic activity even if future Euro appreciation could be modest rather than spectacular.
Read more

We know what you did this summer

The month of August has come and gone and I struggle to pinpoint any new, clear-cut common themes. There has been plenty of news and developments for financial markets to digest and react to, including North Korea’s recent missile launch over Japanese airspace, the devastating impact of hurricane Harvey in Texas, the looming US debt ceiling breach, President Trump’s threats of terminating/re-negotiating NAFTA, ongoing Brexit negotiations between the UK and European Union and French President Macron’s announcement of ambitious labour market reforms.

However, the Economic Policy Symposium in Jackson Hole on 24-26 August promised a lot but as often the case delivered little for markets to hook their teeth into. Moreover, macro data in the past few weeks have not really told us anything really new. Gains in global GDP growth are incremental but 3% seems like a reasonably robust floor. Today’s global manufacturing PMI data for August (due for release at 16:00 London time) are worth paying attention to given the decent correlation with global GDP growth according to my analysis (see Figure 1).

 

Olivier Desbarres I know Fig 1

The mirage of much higher inflation in developed economies remains largely just that – a mirage – which I attribute in part to tepid real wage growth – at least in the US, Australia and in particular the UK. This presents somewhat of a dilemma for the Federal Reserve, far less so for the Bank of England and Reserve Bank of Australia as I discuss below.

This explains in large part the dovish bias in global rate markets, with government bond yields in the US, UK, Germany and Japan continuing to slowly edge lower (see Figure 2). This trend in developed market yields is broadly in line with the view I expressed six weeks ago that skinny market pricing of policy rate hikes was probably appropriate (see Central banks – a muted second inflexion point, 14 July 2017).

 

Olivier Desbarres I know Fig 2

 

The fall in yields has been pervasive across the maturity spectrum and only Australian 2-year bond yields have risen (albeit by a paltry 2bps since mid-July – see Figure 3).

 

Olivier Desbarres I know Fig 3

Markets showing Teflon-like qualities but September may offer more acute test

There is also an argument to make that markets’ threshold for change is seemingly quiet high. The VIX equity volatility index temporarily spiked to 14 a few days ago but is now back on a 10-handle and the Dow Jones is grinding back higher. Sterling has been reasonably well behaved in the past week while the Euro, the poster-boy of developed currencies for the past five months, is struggling to extend its gains (in nominal effective exchange rate terms).

Event risk is clearly more acute in September, as central banks resume their policy meetings and parliaments return to work (see Figure 4). Even so, it is not obvious to me that major central banks will deliver the kind of surprises which cause major dislocations in financial markets. Lessons seem to have been learnt since the Fed’s 2013 so-called “taper tantrum” and I would expect central bankers to be particularly cautious in both their actions and words, forcing markets to focus on second or third derivatives.

 

 

The focus will be squarely on the European Central Bank (ECB) and US Federal Reserve meetings on 7th and 20th September, respectively, as central banks in the UK, Japan and Australia are seemingly content with doing very little at present.

 

European Central Bank sitting pretty for now

The ECB is ultimately in a pretty comfortable position, in my view, and can probably afford to do and say little next week. The Euro Nominal Effective Exchange Rate (NEER) has appreciated 5.5% since early May, which amounts to a tightening of monetary conditions and has led to speculation that the ECB will try to jawbone the Euro weaker. The minutes of the ECB’s 20th July policy meeting – which stated that “Concerns were expressed about a possible overshooting in the repricing by financial markets, notably the foreign exchange markets, in the future” were interpreted as evidence of a central bank keen to arrest the Euro’s appreciation.

But I am sticking to my view that the ECB is unlikely to actively talk down further modest Euro appreciation from current levels (see no UK rate hikes this year and room for further Euro upside 28 July 2017), highlighting five reasons. For starters, two key words stand out in the ECB statement: “possible” and “future”. That’s a far cry from saying that the Euro has already-overshot. It is also telling that ECB President Mario Draghi did not mention (directly or indirectly) Euro strength at the Jackson Hole meetings.

 

 

More fundamentally, financial conditions remain loose thanks to the fall in eurozone bond yields (see Figure 3) and decent performance of European equities. Fourth, eurozone macro indicators, including in Germany and France, are pointing in the right direction. Finally, the Euro NEER has been range-bound for the past few weeks (see Figure 5). While it has appreciated versus the Dollar and Sterling, it is down against the Chinese Renminbi (see Figure 6). The upshot in my view is that short of the ECB taking a sledgehammer to the Euro, I see the risk biased towards further EUR/USD and EUR/GBP upside in coming weeks.

French and German politics are unlikely to pose a significant risk to this constructive view of the Euro. President Emmanuel Macron presented on 31st August probably the most ambitious set of labour market reforms in decades which are due to come into effect via presidential decree in late-September. Resistance from the still powerful trade unions and opposition parties has so far been measured but history points to the risk of a more pronounced popular backlash in coming months. While this may further take the gloss off Macron’s presidency and dent his already faltering popularity, markets will have seen this all before so the bar has been set low for Macron.

German Chancellor Merkel is slowly gearing up towards federal elections in three weeks’ time. While the composition of the Bundestag, Germany’s house of parliament, may change to the detriment of Merkel’s Christian Democratic Union (CDU), she looks assured of a fourth consecutive term as I argued earlier this year (see Paradox of acute uncertainty and strong consensus views, 3 January 2017). Whether this is the optimal outcome for Germany is open to debate but markets are likely to welcome the political continuity.

 

Federal Reserve is elephant in the room but I expect EM markets to avoid stampede

The Fed has arguably a trickier set of conditions to navigate. GDP growth is strong, the labour market is nearing full employment but real wage growth remains modest and core inflation is falling. The quarter-on-quarter seasonally-adjusted and annualised growth in the US was revised upwards to 3% for Q2 2017, the fastest growth rate since Q1 2015 (see Figure 7). But as Figure 8 shows, three key measures of core inflation continued to fall in July. Some FOMC members are seemingly keen to look through the lack of inflationary pressures and there is scope for US macro data to surprise on the upside in coming weeks.

 

The bottom line is that I am sticking to my long-held view that the Fed will only hike its policy rate twice in 2017 (see Politics suspected of interfering with economics and markets, 19 May 2017). However, very skinny market pricing of 8-9bp of hikes for the remainder of the year may not sit that well with the FOMC. I would therefore expect some kind of verbal intervention by Chairperson Yellen and other FOMC members to push up market pricing closer to around 15bp to help keep the odds of a December rate hike alive.

While the economic impact of Hurricane Harvey remains difficult to estimate, precedent suggests that major hurricanes have not stopped the Federal Reserve from hiking policy rates. Moreover, the Fed has flagged that it would likely announce at its 20th September policy meeting the beginning of a reduction in its balance sheet (effectively not buying back maturing bonds).

If misjudged and/or ill-timed these announcements could cause wobbles in wider financial markets, including emerging market (EM) equities, bonds and currencies which are already having to deal with the fall in crude oil prices. The consensus seems to be siding with a potentially sharp correction in global equities and EM asset prices. I am somewhat more sanguine about Fed announcements causing a wholesale disruption in EM markets. Macro data out of China are pretty buoyant, EM inflation is falling overall which gives central banks some scope to cut interest rates if necessary while FX reserves (particularly in Non-Japan Asia) provide central banks some room to support their currencies if corrections are disorderly and/or sustained.

 

UK – Glacial pace of change

While May and June provided markets with plenty to ponder – including the ruling Conservatives’ botched general election and the slim possibility of the Bank of England (BoE) gearing towards a rate hike – the past couple of months have been low on excitement. I argued back in March that the BoE would not hike its policy rate this year and I have seen little evidence to change my view (see Bank of England and inflation – sense of déjà-vu?, 24 March 2017). GDP growth in coming quarters is unlikely to rise much from 0.55% in H1 2017 as growth in aggregate real weekly earnings remains turgid despite the record-low unemployment rate (see Figure 9).

The news flow on Brexit has somewhat cooled from the fever pitch earlier in the summer but two developments (or lack thereof) stand out. First and importantly, there is a now a seemingly solid consensus view among senior cabinet members, including Prime Minister Theresa May, that a transitional or implementation period would be required once the UK had left the EU in March 2019. Chancellor of the Exchequer Philip Hamond, Foreign Secretary Boris Johnson, Secretary of State for Exiting the EU David Davis, International Trade Secretary Liam Fox and Secretary of State for Environment Michael Gove have all in recent weeks given their backing for such an arrangement.

This is line with my expectation that a transitional agreement was the more likely outcome (See When two tribes go to war, 2 June 2017). Until recently the British government had repeatedly played down the need for such an agreement between the UK and EU. While the government’s position has yet to be formalised and finalised, markets have seemingly welcomed cabinet members’ meeting of minds. However, there is still much disagreement about a possible transitional agreement’s length and modalities, with estimates ranging from one to four years.

This uncertainty is being compounded by a lack of progress over the UK’s potential “divorce bill”. EU negotiators have repeatedly said that this stumbling block would delay the start of official negotiations over the terms and conditions of a new deal between the UK and EU.

Broken Records

The past year has been remarkable with political precedents set in the US, UK and France, still record-low central bank policy rates in most developed economies and financial markets and macro data at all-time or multi-year highs (and lows).

The US presidency is fraught with problems but markets are turning a blind eye…for now. The UK is still on course to be the first ever member state to leave the European Union come 29th March 2019, at least on paper. French elections have repainted the political landscape and present many opportunities but old (fiscal) hurdles still need to be cleared.

Central bank policy rates remain at record lows in the majority of developed economies, including the Eurozone, UK, Japan, Australia and New Zealand and I expect this to remain the case for the remainder of the year. Loose global monetary policy is likely to continue providing a floor to risky assets, including equities and emerging market currencies.

A number of central banks have hiked 25bp in recent months, including the Fed, BoC and CNB, in line with my year-old view that rate hikes would gradually replace rate cuts. But in aggregate the turnaround in developed central bank monetary policy is proceeding at a glacial pace and I see few reasons why this should change.

The Bank of England has not hiked its policy rate for 526 weeks – a domestic record – and I continue to believe that this stretch will extend into 2018.

In contrast to the Dollar and Sterling, the Euro – by far the most stable major currency in the past seven years – has appreciated over 7% since early April.

While the ECB may want to slow the current rapid pace of Euro appreciation, it is unlikely to stop, let alone reverse, the Euro’s upward path at this stage. For starters, Eurozone growth and labour markets continue to strengthen. The German IFO business climate index hit three consecutive record highs in June-August.

Perhaps the most obvious record which financial markets have broken is the continued climb in US equities to new highs and volatility’s fall to near-record lows.

Emerging market rates continue to edge lower in the face of receding inflationary risks and I see room for further rate cuts, particularly in Brazil given the pace of Real appreciation.

Non-Japan Asian (NJA) currencies continue to broadly tread water, in line with my core view that NJA central banks have little incentive to materially alter their currencies’ paths.

Year-to-date emerging market equities have rallied 24%, twice as fast as the Dow Jones (12%) which has rallied twice as fast as EM currencies versus the Dollar (6%). Read more

Central banks – A muted second inflexion point

Market focus has shifted from elections to central banks’ next steps

Financial markets, having digested the result of parliamentary and/or presidential elections in the US, Austria, Netherlands, France and UK and expecting German Chancellor Angela Merkel to win a fourth consecutive general election on 24th September, have turned their focus to global central bank policy. Specifically, it has centred on the possibility of tighter interest rate policy in developed economies in the form of rate hikes and/or modifications to central bank balance sheets or quantitative easing programs.

 

End-2016 proved to be an important inflexion point for global central bank policy

Up until the summer of 2016, developed central banks were still very much in monetary easing mode, with the exception of course of the Fed which had hiked its policy rate 25bp in December 2015. But eight years of ultra-low (and in some cases negative) central bank policy rates and expansive bond-buying programs had helped stabilise global growth and inflation, albeit at low levels. At the same time, the costs of ultra-loose monetary policy, including asset price bubbles, distortions in bond markets, pressure on the banking sector and even rising inequality, had started to outweigh the benefits.

This led to me to forecast that major central banks may refrain from loosening monetary policy further and that the ECB and BoE would keep the modalities of their QE programs broadly unchanged near term. At the very least I expected central bank policy rate cuts to become increasingly less frequent than in the past and that the world’s most influential central bankers would start tweaking a discourse which had in recent years largely focused on doing “whatever it takes” (see Global central bank easing nearing important inflexion point, 16 September 2016).

At the same time I argued that bar the Fed and possibly a handful of emerging market central banks still fighting weak currencies and high inflation, no major central bank was likely to hike policy rates or tighten monetary policy in the remainder of 2016 – that was a story for 2017, at the earliest.

 

This scenario has largely materialised, with the exception of the Reserve Bank of New Zealand delivering a final 25bp rate hike in November 2016.

  • Since then no developed central bank has cut its policy rate with a GDP-weighted average of policy rates bottoming out and more recently inching higher (see Figure 1).

 

olivier desbarres cb update fig 1

 

  • The only major central banks to have cut rates are the Central Bank of Russia and Banco Central do Brazil (see Figure 2). In May and June 2017 no major central bank cut its policy rate – the only other time this has happened in the past four years was in December 2016.

 

 

  • Central banks in Turkey and Mexico, in the face of still high inflation, have hiked their policy rates 50bp and 225bp respectively since August 2016.
  • The US Federal Reserve has already hiked rates 50bp this year and there has been growing talk of the Fed shrinking the size of its balance sheet.
  • This week the Bank of Canada hiked its policy rate (25bp) for the first time in nearly seven years.
  • Three out of eight members of the Monetary Policy Council of the Bank of England dissented in favour of a 25bp rate hike at the June policy meeting.
  • The European Central Bank has adopted a marginally more hawkish language in recent months. There is mounting expectation that the ECB will announce as early as September an extension of its quantitative easing program beyond-2017 but also a gradual tapering of the monthly amount of bonds purchased (from €60bn currently), with QE ending fully in late 2018 or early 2019.

 

This has led to growing speculation that we have reached a second inflexion point in developed central bank policy and one which could be sharp enough to dislocate global growth and asset markets, particularly in emerging economies. But financial markets, at present, expect only very marginal policy tightening by developed central banks. Specifically:

  • US Federal Reserve: Markets have all but priced out a September hike and are pricing in only another 12bp of hikes by year-end (i.e. a 50% probability of one more 25bp hike this year)
  • Bank of England: 12bp of hikes priced by year-end (i.e. a 50% probability of one hike this year)
  • Reserve Bank of Australia: No hikes priced in for the remainder of the year and only 15bp of hikes priced in for the next 12 months.
  • Bank of Canada: One more 25bp hike priced for this year.

This skinny market pricing of policy rate hikes is appropriate, in my view. At a global level, there are signs that GDP growth may have plateaued in Q2 2017 at around 3.1-3.2% year-on-year (see Figure 3), as I argued in H2 2017: Something old, something new, something revisited (23 June 2017).

 

 

Moreover, inflationary pressures remain muted in developed economies. Headline CPI-inflation in both developed and emerging market economies steadily rose between end-2015 and early 2017 but has since fallen (see Figure 4).

 

 

Perhaps more importantly, core CPI-inflation, which strips out food and fuel prices, has risen in emerging markets but after having flat-lined for years in major developed economies has in recent months dipped lower (see Figure 5). Only in the UK has core CPI-inflation risen and this is mainly attributable to higher imported inflation fuelled by the collapse in Sterling following the 23rd June 2016 EU referendum.

 

 

Moreover, in the US and Australia positive employment growth and very low unemployment rates continue to go hand in hand with only modest growth in real wages, while in the UK real wages are falling – an issue which I first identified in The common theme of low-wage growth, 10 February 2017). The inability of workers to command larger increases in nominal wages is acting as a break on both inflation expectations and consumer demand, and in turn is likely to curb underlying inflation going forward, in my view.

 

Bank of England – Policy rate to remain on hold in August and potentially rest of the year

The weakness of the UK economy and uncertainty associated with the Brexit process are high enough hurdles for the Bank of England (BoE) to refrain from hiking policy rates any time soon (see UK: Land of hope & glory…but mostly confusion, 7 July 2017).

I maintain my view that the BoE’s eight-member MPC is unlikely to hike its policy rate of 0.25% at its August meeting. While I expect MPC member Andrew Haldane to join Michael Saunders and Ian McCafferty in voting in favour of a 25bp hike, new member Silvana Tenreyro is likely to vote in favour of no change which would result in a 3 versus 5 vote in favour of rates remaining on hold. Importantly, I believe that Governor Carney – who has the casting vote in the event of a 4 versus 4 tie – will again vote for no change, even if he has had a tendency to blow hot and cold.

 

US Federal Reserve – Skip September meeting, keep December alive?

The US Federal Reserve has hiked its policy rate 50bp year-to-date but markets, which are pricing only 12bp of hikes for the remainder of the year, are clearly divided as to whether FOMC members will stick to their end-2016 forecast that three hikes would be appropriate in 2017. My core scenario remains that the Fed will not hike rates again in 2017 although this is a modest conviction call. While the labour market is inching towards full-employment, measures of US core inflation have fallen as pointed out by a number of FOMC members, including Chairperson Janet Yellen (see Figure 6).

 

 

The Reserve Bank of Australia has given every indication that it will remain pat on interest rate policy for the foreseeable future and while the Bank of Japan is prone to tweaking inflation targets and yield targets I do not foresee major policy changes at this juncture.

 

Olivier Desbarres

Olivier Desbarres currently works as an independent commentator on G10 and Emerging Markets. He has over 15 years’ experience with two of the world’s largest investment banks as an emerging markets economist, rates and currency strategist.

Asian currencies keeping their head in a world losing its own

Financial markets have had much to digest in recent weeks and the calendar for the remainder of May and June is anything but light, with the Fed and ECB holding key policy meetings and legislative elections in both the UK and France.

Nevertheless, most major currencies have either been flat or appreciated against a slowly weakening Dollar in the past month, with only the high yielding Brazilian Real, Russian Rouble and Indian Rupee (INR) and Australian Dollar weakening by 0.5% or more.

Conversely, European currencies have outperformed, with in particular the Euro Nominal Effective Exchange Rate (NEER) up about 3.4% since mid-April – in line with my constructive near-term euro outlook.

Non-Japan Asian (NJA) NEERs have seen only very modest moves in the past month. Bar the Malaysian Ringgit NEER which is up about 1.1% and the INR NEER which is down about 1.7%, NJA NEERs have appreciated or depreciated by less than 1%.

The question is whether this relative calm in NJA currency markets is likely to become more entrenched or whether FX flows and/or central bank policy are likely to fuel greater volatility or see some currencies adopting a clearer direction.

As a starting point, I would again note that the pace of depreciation and appreciation in most NJA currencies tends to be confined to reasonably narrow ranges.

While this is partly a by-product of seasonal patterns in current account balances and the ebbs and flows in capital migrations, it also arguably reflects central banks’ desire and scope to control their currencies.

At this juncture I would conclude that few central banks – including the MAS and PBoC – face overwhelming economic reasons to markedly alter the paths of their currencies via the bias of FX intervention and/or interest rate policy.

There is however perhaps a case for Bank Negara Malaysia to favour a weaker or at least stable Ringgit NEER which has appreciated about 2.7% since mid-April.

Read more

Politics suspected of interfering with economics and markets

In the US, political intrigue, seemingly lifted straight out of a John Le Carré novel, has reached a crescendo and there are now multiple investigations running concurrently.

If we assume these investigations will run over weeks/months, the question is whether and to what extent this political backdrop is likely to impact financial markets, US government policy-making, the US and global economy and Federal Reserve monetary policy.

US equities have corrected lower, volatility has spiked and markets are seemingly ignoring positive data surprises

It has all been rather orderly so far but it is difficult to see how at this juncture, with major policy initiatives likely kicked down the road, US equities can launch another meaningful rally. If anything big data misses are likely to further pressure stocks. 

The Dollar’s performance has been mixed in the past month, posting its biggest loss against the euro in line with the fundamentally bullish euro view I expressed in December and April.

Capital inflows into the eurozone allied to a 2% of GDP current account surplus, a pick-up in economic activity and receding political risks following the French presidential elections are likely to extend the euro’s current rally near-term.

However, the ECB’s stance on its quantitative easing program will be key in shaping the euro’s medium-term path.

US economic indicators paint a blurry picture while solid global GDP growth is seemingly struggling to make further gains.

The Fed and US rates market have the unenviable task of making sense of these macro trends and a quickly changing political landscape.

The apolitical Fed will of course stay above the political fray, even if markets do not with pricing for the probability of a 25bp hike at the 14th June policy meeting continuing to oscillate between 60% and 75%.

My core scenario is that the Fed will hike rates only once more in 2017 although I acknowledge that this is not a high conviction call. The market seems still on the fence, pricing in a further 32bp of hikes in the remainder of the year.
Read more

US, UK and global GDP growth update – Put the champagne on ice

US GDP data weakest of a disappointing lot

Data released today show that Q1 2017 real GDP growth:

  • In the US slowed to 0.7 quarter-on-quarter (qoq) annualised, from 2.1% qoq in Q4 2016 – the weakest growth rate in three years (see Figure 1);
  • In the UK halved to 0.3% qoq – the weakest growth rate in a year;
  • In France slowed to 0.3% qoq from 0.5% qoq in Q4 2016; and
  • In Spain rose to 0.8% qoq from 0.7% qoq in Q4 2016.

Read more

French elections in focus but US data likely to draw attention

February is ending with a whimper rather than a bang. Market pricing for a Fed hike in March continues to flirt with 5-6bp while in the UK the market seems to be waiting for the government to trigger Article 50. Meanwhile the ECB is likely to stay in a holding pattern until it knows what kind of French president it will be facing come 7th May.

US ISM, income, spending, and inflation data out on 1 March could however potentially move the needle on financial markets.

I continue to expect a 25bp Fed hike in March but acknowledge that this is a low conviction forecast at this stage.

In France, the latest headline-grabber is that veteran centrist politician François Bayrou announced on the evening of 22nd February that he had opted not to run for the presidency. He will instead lend his support to Emmanuel Macron, the independent centrist candidate of the En Marche! Movement.

This should have come as little surprise but markets still reacted positively, with in particular French bond yields sliding lower.

The justification for this admittedly modest market reaction is that Bayrou’s electorate will now transfer its votes to Macron, in turn increasing the probability of Macron coming ahead of François Fillon and making it to a second round run-off against Marine Le Pen.

There is some logic to this argument, as recent polls suggest. Moreover, the relatively inexperienced Macron may benefit from Bayrou’s familiarity with the ins-and-outs of campaigning gained over three previous presidential election bids.

But there is also some evidence that Fillon, the Republican candidate, may benefit from Bayrou’s decision and it is simply too early to predict with confidence whether Macron or Fillon will make it to the second round.

The bottom line is that Bayrou’s decision has increased the odds of Macron and to a lesser extent Fillon making it to the second round and further decreased the odds of Le Pen winning in the second round against either Macron or Fillon.

Meanwhile, time is running out for Socialist Party candidate Benoit Hamon to secure a second round place.
Read more

March Madness

Despite Donald Trump having been inaugurated as the 45th President of the United States only 28 days ago, saying that it has been an event-packed month is the under-statement of the decade.

However, as Randy Bachman sang in his number-one hit in 1974 – incidentally the year President Richard Nixon resigned following the Watergate scandal – “You Ain’t Seen Nothing Yet”.

Read more

The common theme of low-wage growth

Weak wage growth runs through the many themes which markets are focussing on

The media and financial markets have tried to make sense of a number of key themes in the past twelve months, including:

  • The only modest rise in GDP global growth, major central banks’ reluctance to tighten monetary policy and the Fed’s glacial pace of rate hikes despite the improvement in the US labour market ;
  • Donald Trump’s surprise election victory in the November US presidential elections;
  • The Brexit referendum vote in the UK; and
  • The rise of nationalism and populism in Europe.

Read more

1 2 3