Negative interest rates and equities record highs

Two alternatives to obtain positive returns while keeping risks and diversification under control in a negative interest rate environment.
The March edition of Perspectives magazine is now available

New paradigm of negative interest rates raises a number of issues

Sub-zero interest rates paradigm

In this video, Yves Bonzon, Chief Investment Officer for Pictet Wealth Management, explains how negative interest rates impact the economy and what countries will outperform in this new paradigm.

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Share buybacks: a powerful driver that looks set to gain even more momentum

Share buybacks can involve huge sums of money. Apple, the world’s largest-capitalisation company at $748bn, repurchased 6% of its capital in 2014. That works out at a record buyback worth $46bn. In a world where top-line growth is expected to be lacklustre in 2015, the temptation is very alluring for company boards to boost earnings […]

Euro area: manufacturing sector gained momentum in March

Overall, PMIs and national surveys (IFO, BnB survey) were in line with the recent uptrend in economic data, confirming that the euro area is experiencing a cyclical improvement, largely driven by lower oil prices, a weaker euro and an expansive monetary policy. Services led the upward move The euro area flash manufacturing PMI increased from […]

Safe-haven assets beating a retreat

Gold and bonds regarded as being the most secure, like US Treasuries or German Bunds, lost ground in February as they reacted to hopes of a favourable outcome to talks between Greece and eurozone authorities.

Equities still in pretty good shape

Our indicators are showing bullish readings for equity markets in the developed world. However, we expect to see markets temporarily peaking in Q2 and hitting a more significant top later in the year. At this juncture, we see no reason to rejig our weightings for equities in portfolios. Share indices in developed nations advanced to […]

United States: the FOMC has given itself more flexibility

Overall, the FOMC's meeting was clearly dovish. We expect the first hike to take place in September 2015, followed by a pause until early next year. Calendar guidance abandoned Admittedly, the most important question mark regarding last week’s FOMC meeting was what the FOMC would do with the wording saying that the Committee judges that it can […]

Eurozone economy picking up some momentum

If we look back to our core economic scenario outlined in November last year, three of the key developments we had pinpointed already materialised in January this year: firm anchoring of US growth; quantitative easing at the European Central Bank (ECB); resurgence of systemic risk in the eurozone. On the latter score, the constructive talks […]

Euro area: Wind of optimism

In this post, we examine the evidence that could underpin an upbeat scenario and discuss cyclical factors versus structural ones. Marked rebound in private consumption Retail sales have recently bounced back significantly. The recovery started at the beginning of 2014, but sales have noticeably accelerated since September (+0.7% m-o-m on average in the last 4 […]

New paradigm of negative interest rates raises a number of issues

Two ways to manage negative rates Some believed that the race towards monetary easing had reached its climax with quantitative easing (QE) and the zero interest-rate policy. Yet against all odds, a further stage occurred with the introduction of negative interest rates in the eurozone, Denmark, Sweden and Switzerland. In the process, the yield to […]

European Central Bank: Mario Draghi claims victory

Expectations were high that Mario Draghi would provide important information about the QE programme (officially called the PSPP: Public sector asset purchase programme). In this regard, Thursday's press conference was disappointing. In fact, the main news was the announcement that sovereign bonds could be purchased even if yields are negative. The other big news was […]

Euro area: on track to normalisation

Four drivers are currently supporting the euro area recovery: the crude oil price drop, euro depreciation, the end of austerity and, finally, expansionary monetary policy. Monetary aggregates have already started the normalisation process ahead of the launch of the ECB’s QE. It is essential that these forces last for a while to give the still […]

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