Macroview

USD likely to peak against yen in first half of 2018

From 6 November to 28 November, the Japanese yen gained 2% against the US dollar, outperforming all G10 currencies but the euro. In our view, the key driver of the USD/JPY rate is the 10-year real rate differential, especially since the introduction of the yield-curve-control (YCC) framework by the Bank of Japan (BoJ) on 21 […]

Switzerland: stronger and broader growth

According to the State Secretariat for Economic Affairs (SECO), Swiss real GDP expanded by 0.6% quarter-on-quarter (q-o-q) in Q3 2017, in line with consensus expectations and our own forecasts. This comes after several quarters of poor performance. As we mentioned in our previous Flash Note, the downturn in previous GDP figures was exacerbated by special […]

Debt energised

As 2017 draws to a close, it is worth taking stock of this year’s highlights. On US financial markets, this year will probably be remembered as ‘Goldilocks’ time. Financial conditions have been very accommodative. Initial fears about the impact of the Federal Reserve’s monetary tightening have faded, since the Fed has hiked rates very gradually […]

Developed-market equities continue to price hard data

The momentum behind hard macro data is improving investors’ visibility on corporate profit growth in developed markets (DM), which we expect to be the main market risk factor driving equity markets over 2018. According to our analysis, 96% of year-to-date returns of the Stoxx Europe 600 have been due to earnings growth and 59% of […]

Good things come to those who wait

Recent months have not been kind to Scandinavian currencies: the Swedish krona and the Norwegian krone lost, respectively, 4.3% and 4.7% against the euro from the start of September to 24 November. The weakness of the Swedish krona could be explained by some disappointment at the re-election of the very dovish Stefan Ingves as Riksbank […]

Hedge funds: alpha at the end of the QE tunnel

A few years back, news that the Fed was reducing its balance sheet and considering rate rises would have prompted a severe market reaction. Today, as the ECB sets out plans for shrinking its own quantitative easing (QE) programme, the calm on financial markets is striking, affording, we believe, new opportunities for hedge funds. In […]

Oil prices to push ECB staff projections for inflation slightly higher

This week was all about stellar euro area PMIs and hawkish nuances in the accounts of the October ECB meeting. However, the arrival at another deadline went unnoticed – the cut-off date for ECB staff projections, which implies that financial inputs will be derived from market expectations as at 23 November. Using elasticities derived from […]

Banks: the outlook improves on both sides of the Atlantic

Although third-quarter 2017 earnings results were mixed in Europe, compared with a better season in the US, 2017 is still set to be the first year of consistently decent earnings for banks after several years of disappointing results, especially in Europe. The market has noticed the improvement, and the sector has outperformed in recent months. Headwinds […]

Increasing growth visibility would reassure investors

The current growth phase of the economic cycle started almost nine years ago in the U.S. and some emerging countries, making it the second-longest period of expansion in modern American history after the 1960s. But, increasingly, the question of whether a new recession is imminent or not has been coming up in discussions about scenarios […]

Another broad-based rise in PMI… a headache for the ECB?

The euro area composite purchasing managers index (PMI) index surged well above expectations in November amid broad-based improvements across sectors and countries and the strongest pace of job creation in 17 years. At face value, November PMIs look consistent with real GDP growth accelerating further in Q4, to 0.8% q-o-q in the euro area, 0.9% […]

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