After a good start, September saw equity markets take a hit, particularly in emerging Asia. Alongside ongoing investor concerns about the pandemic and weakening global growth momentum, markets were rocked by news of debt payment problems at Chinese property developer
Weekly investment update: The recent spikes in energy prices and US Treasury bond yields have strained emerging Asia’s asset prices and currencies. Rising commodity prices are worsening Asia’s balance of payments dynamics, putting the currencies of large oil-importing countries under
Fast and affordable internet service has become a critical component to working, studying, accessing health care and participating in the political process – both in the US and across the globe. In 2016, the United Nations went so far as
The ‘excitement’ of an FOMC meeting, shenanigans at Evergrande, revised forecasts from the OECD and the German general election led to a rise in yields last week (see chart of the week). The US Federal Reserve presented a more hawkish
U.S. Treasury yields closed higher last week, led by longer maturities. After starting the week lower due to Chinese market fears, rates jumped sharply on Thursday to finish the week about eight basis points …
What should investors make of the flurry of regulatory tightening that China has implemented since the second half of 2020? How do the measures fit into China’s central strategy as it seeks to strengthen its domestic sector and embarks on
Equities have remained buoyant over the past weeks despite some challenges (China regulation, Afghanistan crisis), primarily due to the exceptional earnings seasons in the US and Europe. Looking ahead, we identify three main themes: the spread of the Delta Covid
The past month has seen geopolitics move back into the headlines as the United States and its allies made a final withdrawal from Afghanistan. Reflecting on the often messy resolution of military conflicts over the ages, the concept …
Diverging macroeconomic policies in China and the US have created market volatility recently amid concerns that China’s growth slowdown could spill over into Asia and a less generous US central bank could mean tighter US dollar liquidity for …
Judging from the performance of equity markets alone, the past four to six weeks appear to have followed the theme of the previous 12 months: a relentless rally in risk assets. When other markets are considered, though, a very different picture emerges.
European Gazette: As central banks move gingerly towards normalising monetary policy, a delicate balancing act is under way. They need to tighten policy – but neither too soon, nor too quickly. Indeed, the flattening of the US yield curve in
It feels so good to celebrate the recovery from the Covid-19 recession. Economists in both the UK and US are turning out bright and buoyant forecasts for strong economic growth in both 2021 and 2022. Jobs are readily available and
Flash Update: Q2 2021 proved to be another good quarter for banks, beating market expectations once again. These beats were generally driven by better revenues in capital market divisions, especially equity trading and M&A, whilst loan loss provisions continued to
Equities have remained buoyant over the past weeks despite some challenges (China regulation, Afghanistan crisis), primarily due to the exceptional earnings seasons in the US and Europe. Looking ahead, we identify three main themes: the spread of the Delta Covid
brief summary of their views. In his speech, Chairman Powell indicated that the US Federal Reserve (Fed) is on track to begin tapering its $120 billion-per-month asset purchase program later this year and shared a dovish view on US inflation.
The markets easily withstood many adversities in the summer. In the coming twelve months equities and real estate remain our favorites, though their potential returns are only moderate. Asurprisingly good quarter is behind us. Despite the delta variant, the U.S.-China
Asset Allocation Monthly: During August, investor edginess increased. Financial markets partly reflected this with a decline in equities and commodities, a fall in long-term bond yields, and a rise in the US dollar. Expectations about the US Federal Reserve’s monetary
Recovery in the economy and real estate investment markets gathered pace in the second quarter, though the new Delta variant of the virus poses a threat. Real estate showed strong returns in the first half of the year, driven by
Disappointing US dollar bond returns in EM local currency debt has led to a decline in flows into the asset class over the past decade. In this paper, we discuss the key reasons to invest in EM local currency debt, some of the factors behind the recent weakness in the asset class returns and prospects for the asset class going forward.
When it comes to America’s biggest technology companies, it seems like regulatory risk has never been higher. Most large technology platforms are facing pressure from US and European authorities, while lawmakers on Capitol Hill seem more inclined to doing something
– The recovery phase of the US economic cycle is increasingly mature and looks set transition to its next phase in the coming months, a ‘mini-cycle’, similar to the long expansions of the 1990s and in the post-Global Financial Crisis
Various Push-Pull Factors Argue for a Watchful Investment Approach: The U.S. and global high-yield markets experienced a strong second quarter. Year-over-year trends in corporate fundamentals based on first-quarter earnings released in the …
In Credit: Bond markets continue to lack much direction. It was inflation week in the US. As expected, the headline rate of consumer price inflation came in at 5.4%, unchanged from the prior month (see Chart of the week), while
Fixed Income Perspectives: U.S. consumer prices see their largest increase since 2008, topping all estimates. That summarizes headlines about recent inflation data. Since the beginning of this year, our view has been that the change …
In Credit: Inflation had long been expected to rise – and rise it has! Data released from the US and UK last week showed a jump in prices that exceeded (increased) expectations by some margin. Starting in the US, Consumer
Flash Update: Following the continued improving macroeconomic backdrop, the Fed are expected to signal a cessation of monetary stimulus in the coming months, initially with asset purchase tapering, followed by raising interest rates. In anticipation of such a move, investors
From November 2020 to early May 2021, U.S. value stocks generated strong absolute and relative performance versus U.S. growth stocks, a trend also seen in global equity markets. However, the value rally has recently fizzled, and growth stocks have regained
For the first time in several months, inflation in the US has moderated, indicating that price pressures in some areas have weakened. Big questions remain over the extent durable goods prices – which have been a significant source of inflation
Quarterly macro and market insights: Financial markets rallied amid The US and Eurozone are leading the rebound in activity stronger-than-expected recoveries in many parts of the global economy and signs that central banks intend to remain more accommodative than had
Covid-19 index: when might life return to ‘normal’? As the US continues its Covid-19 vaccination program, the Return to Normal Index measures human activity data relative to pre-pandemic levels. The index is constructed by our data scientists and fundamental analysts
But changing rules and laws isn’t easy and would take time. President Joe Biden’s nomination of key staffers and recent executive order (EO) focused on “promoting competition in the American economy” signaled his administration’s strong support for a government-wide revision
The Beveridge Curve (named after British economist William Beveridge) is an economic relationship between the job openings rate and the unemployment rate. It would stand to reason that the stronger the economy, the more job openings there are and vice
Multi-asset market outlook: Interest rates seems to have entered a period of consolidation. US rates even moved lower towards the 1.40% level in June. In Europe, most rates kept upwards momentum, but at a much slower pace than in previous
Mid-Year Outlook 2021 The view of investors on the outlook for US growth and inflation has varied significantly over the course of the year. Following the positive vaccine trial results last November, and particularly with the Democratic Senate victories in
These past few weeks have seen an interesting shift in investor fears, from inflation to growth, and back again – with a dose of Delta variant fear added to the mix. Indeed, growth is likely to have already peaked in
Can there be such a thing as too much money? There is certainly a huge amount of money sloshing through the US financial system, which is straining the shortterm funding market and threatening to push short-dated Treasury yields below zero.
Weekly investment update: Another month, another US inflation report beating market expectations. Headline year-on-year consumer price index (CPI) inflation has gone from 1.1% last November to 4.9% in May. Even though economists knew that base effects meant the rate of
This July, we find ourselves looking back on a half a year of upside surprises. As the year started, we expected an better run than we had in 2020, which was a low standard to surpass. Rapid progress distributing vaccines
President Joe Biden’s first months in the White House fully reflect his administration’s commitment to pursuing a transition to a low carbon economy. Biden has rejoined the Paris Agreement and recently announced a highly ambitious target to reduce emissions by
Below is a brief recap of the views of Tim Ng and Tom Hollenberg, fixed income portfolio managers and members of Capital’s interest rates team, regarding the Fed’s announcement on 16th June. Fed officials projected two interest rate increases by
Fundamentals have continued to recover alongside vaccination efforts and reduced Covid restrictions, as well as fiscal and monetary accommodation driving increased general economic activity. We expect these factors …
We have observed that additions and deletions to the S&P 500 Index follow a dependable pattern: additions underperform and deletions overperform overthe subsequent12-month period. The December 2020 rebalance out of AIV and into TSLA lived up to this pattern rather
Global Asset Allocation Views: High frequency data suggest that economic activity is surging, aggregate household balance sheets are in good health, and economic output in developed markets is expected to surpass pre-pandemic levels by 3Q21. The question, perhaps, might be
The return of housing as an economic driver gives the Fed options. Home prices in the U.S. are booming and may continue to do so for a while yet. This will likely give the post‑coronavirus economic recovery a very different complexion
The rapid roll-out of vaccinations across the US and the UK, with Europe catching up, pushed developed market PMIs once again to record highs in May. Business activity and new orders have accelerated across both manufacturing and services sectors, business
It’s been great to see the economy reopen, releasing a tremendous surge of energy. But anxieties remain: Will the economy overheat? Are we on a course toward runaway inflation? Will the workforce return to its former size? While these are
As emerging markets matured over the last couple decades, many countries began issuing debt, denominated in their respective local currency, rather than US dollars. This has created a valuable sub-asset class worth more than 3 trillion US dollars, alongside US
Asset Allocation Monthly – June 2021: Investor attention is turning to where economic growth will accelerate next as vaccine rollouts allow more and more economies to reopen. The current leaders, the US and UK, will soon pass the baton to
Having hit a record high in late April, global equities peaked again in May after a choppy spell. Inflation appears to worry investors less now than it did at the start of the year. The latest indicators are beginning to
We believe the forces driving US commercial real estate investment performance are strengthening and supporting expectations for a solid if not impressive recovery from the Covid-19 recession. First quarter National Council of Real Estate Fiduciaries (NCREIF) results were notable with
