Beyond Bulls & Bears

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Fixed Income

Why Australia May Not Join the Rate-Tightening Party

“We don’t think the RBA is likely to raise rates in the next 12-18 months. There is a heavy load on the shoulders of Australian households. Australia’s economy is benefiting from global growth, particularly in China, but that growth would have to be quite significant to reduce household debt or improve wage growth. If these issues don’t improve in the next year or so, we believe the RBA’s next course of action could be a rate cut.” – Chris Siniakov and Andrew Canobi, Australia Fixed Income team

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Perspectives

Preparing for a Possible Post-LIBOR World

“We believe a change from LIBOR to an alternative benchmark would be significant. Global lenders use LIBOR to set interest rates for a variety of financial products, including interest-rate swaps, student loans, mortgages, collateralized loan obligations (CLOs) and floating-rate loans. A change would require amendments to contracts and credit agreements, underlying trillions of dollars in global assets.” – Franklin Templeton Fixed Income Group’s Mark Boyadjian and Reema Agarwal

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Fixed Income

In the Know: Trump’s Fed Chair Pick Seen as Market Positive

“The markets should take some comfort in Powell, as he is a current Fed governor and more or less represents the current state of affairs, business as usual. He has worked alongside Yellen since 2012, and they are philosophically alike (dovish bent).” Christopher Molumphy, Franklin Templeton Fixed Income Group

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Fixed Income

Do Markets Fully Understand the Implications of ECB Tapering?

"The [tapering] decision should set the ECB on the path to monetary policy normalisation, but we don’t expect it to be a quick journey. We expect the eurozone to maintain an accommodative approach and low interest rates for some time to come." - David Zahn, Franklin Templeton Fixed Income Group

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Multi-Asset

A Selective Look at Corporate Credit

“In line with a positive assessment of economic fundamentals, we view credit conditions as favourable. Interest rates remain low, corporate balance sheets generally remain strong and debt-service costs appear manageable. Markets still appear receptive to debt offerings.” – Ed Perks, Franklin Templeton Multi-Asset Solutions

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Fixed Income

Putting Geopolitical Tensions into Perspective

When world leaders talk, markets react. And with social media becoming mainstream, politicians have a new way of getting their message to the masses. Franklin Templeton Fixed Income Group’s John Beck discusses geopolitical tensions, the impact of social media and the broader macroeconomic issues impacting the global fixed income landscape.

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Perspectives

What’s Next for Europe as Merkel Is Re-elected

"We think the level of support for AfD does reflect a protest vote from people who have been unhappy with the direction things have been going in Germany. That could have an influence on Merkel’s approach as she looks past her election victory.” - David Zahn, Franklin Templeton Fixed Income Group

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Fixed Income

Global Economic Perspective: September

In this month’s Global Economic Perspective, Franklin Templeton Fixed Income Group examines the potential impact of recent storms on the US economy, Europe’s monetary policy path and whether the global economy’s upturn is sustainable.

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Fixed Income

The Fed’s Balancing (Sheet) Act

The Federal Reserve’s September policy meeting played out largely as expected, as US monetary policymakers left the central bank’s benchmark short-term interest rate unchanged. The Fed did clarify when it would begin to unwind its hefty balance sheet, and updated its economic forecasts and interest-rate projections. Chris Molumphy, Franklin Templeton Fixed Income Group CIO, says the communication from the latest Fed meeting should not rattle the markets much, and that the next interest-rate hike now seems most likely to come in December.

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Fixed Income

How the German Election Could Dictate Europe’s Future Direction

“These are optimistic times in Europe, in general. In contrast to what many observers might have expected nine months ago, the political structure in Europe is probably the most stable it’s been in 10 years.” - David Zahn, Franklin Templeton Fixed Income Group

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Perspectives

Time to Reset Expectations?

Global markets have been relatively calm this summer despite many uncertainties. Geopolitical risks have continued across the globe, and in some areas, looming monetary policy changes also appear likely. A key question for many investors is whether the sleepy summer period of low volatility will give way to a more turbulent autumn. Franklin Templeton’s senior investment leaders offer their perspective on the markets and discuss where they see opportunities and risks ahead.

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Fixed Income

Why ECB Tapering Could Prompt a Change in Bond-Market Philosophy

“While some commentators may question whether the ECB should embark on tapering when it still doesn’t see itself hitting its inflation target within its time horizon, I would say that’s exactly what the central bank should do.” David Zahn, Franklin Templeton Fixed Income Group