Beyond Bulls & Bears

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European QE: Has It Been Worth the Effort?

Now, we feel the time is right for a further shot in the arm. In our view, it’s not a question of whether the ECB will extend QE, it’s a question of when: Will the announcement come in October or December?

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Global Economic Perspective: April

Given the example set by US equity markets after the Fed stepped in to buy government debt in two successive QE programs, investors appear convinced that the rally in European financial markets has considerably longer to run.

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Global Economic Perspective: March

We think the US economy is currently in a kind of ‘goldilocks’ scenario, with positive economic growth and low inflation.

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Global Economic Perspective: February

Unless we see further significant drops in oil prices from their current levels, we believe the impact on headline inflation will progressively fade.

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Global Economic Perspective: January

There might be the risk of further geo-political instability involving countries like Russia, Iran and Iraq as a result of their declining macroeconomic prospects. However, we believe that while there are losers from the dramatic fall in oil prices of the past six months, the global economy as a whole should benefit from lower oil prices in the coming months.

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Global Economic Perspective: December

The lower cost of oil should support economic growth by helping boost corporate earnings and, if it lasts, might lessen the pressure on the Federal Reserve to raise interest rates at anything more than a very gradual pace.

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Global Economic Perspective: November

We continue to believe there is a possibility that US rate increases could come faster than the market has been forecasting until recently.

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Global Economic Perspective: October

European leaders seem to be engaged in an increasingly shrill debate about the relative merits of short-term austerity aimed at medium-term gain versus the need to allow more fiscal slack in the short term to boost demand.

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Global Economic Perspective: September

The global reach for perceived safety and for yield has been driving demand for long-dated Treasuries and seemingly trumping fundamentals. There also appears to be a widespread expectation that even after the Fed embarks on monetary policy normalization, rate increases are likely to be modest.

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Global Economic Perspective: August

With the pick-up in the US economy leading to increased talk of policy normalization there, but monetary easing still the order of the day in the eurozone, we believe there could be some yield divergence between US Treasuries on the one hand and European (and Japanese) benchmark bonds on the other.

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Global Economic Perspective: July

Given the quickening pace of [US] growth, combined with continued improvements in employment, the expectation that inflation will stay at its current levels may turn out to be unjustified.

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Global Economic Perspective: June

With 10-year US Treasury yields dropping below 2.5% at one point during early June in spite of improving forward economic indicators, the US bond market has continued to send out confusing signals, in our view.