US biopharma set to rebound

Biopharma suffered a poor 2016 after years of strong performance. Political rhetoric was the main source of volatility, but the sector also suffered from poor execution. We think 2016 helped reset expectations and created an attractive opportunity to build long-term positions. Uncertainty will linger in the first half of 2017, but overall we expect a […]

Business activity, job creation and price pressures remain strong in euro area

The euro area composite PMI eased slightly to 54.3 in January, from 54.4 in December. Importantly, the breakdown by subindices showed that employment rose at its fastest rate since 2008, which bodes well for domestic demand. Overall, PMI indices look consistent with real euro area GDP growth of 0.5% q-o-q in Q1, slightly above our […]

China: near-term prospects good, mid term less clear

Chinese GDP grew by 6.8% in Q4 2016 and by 6.7% in 2016 as a whole, in line with our forecast. The pick-up in fixed-asset investment in the second half was probably the key contributor to this solid performance. The likelihood of a sharp deceleration in fixed-asset investment in Q1 2017 has declined greatly. Growth […]

Patient ECB to wait for underlying inflation to improve

At today’s press conference following the GC meeting, ECB President Mario Draghi’s message was one of continuity, very much as expected. The stronger momentum in economic activity and headline inflation, he suggested, was no reason to declare victory as long as downside risks remain. Importantly, the ECB’s statement suggests that the GC will look through any […]

First tightening of euro area credit standards in three years

Credit standards on loans to euro area enterprises tightened in Q4 2016 for the first time in three years. The move was essentially driven by developments in the Netherlands. Demand for credit continued to rise across all categories of loans, once again driven by generally low interest rates and M&A activity. Looking ahead, banks expect […]

The ‘Frankenshock’, two years on

On 15 January 2015, the Swiss National Bank (SNB) decided to discontinue the minimum exchange rate of CHF1.20 per euro introduced in September 2011. The SNB’s announcement came as a shock for the Swiss economy, and resulted in a sharp appreciation of the Swiss franc. But two years later, the Swiss economy has proven to […]

Using AI to forecast financial markets

AI algorithms are in place to make more accurate predictions of market movements than an individual human analyst.

Sovereign yields to rise as reflation takes hold

Our central scenario for developed markets sovereign bond yields in 2017 is based on our in-house risk-factor analysis, which is leading us to conclude that there is a 65% probability that 2017 will be a year of reflation (see table). Underpinning the economic environment will be the following three macroeconomic factors: Inflation, which should accelerate […]

The crisis in the Middle East and oil prices

Oil currently seems to have reached its fair value at around USD50 per barrel for Brent crude. We expect prices to average around USD55/b in 2017, while supply continues to adapt to sluggish demand. The agreement between OPEC members on 30 November and with non-OPEC producers a week later should reinforce the trend toward stabilisation, […]

Solid US job figures, wages accelerate

Non-farm payroll employment in the US rose by 156,000 month on month in December, slightly below consensus expectations of 175,000, while payroll growth figures for the previous two months were raised by 19,000. The unemployment rate rebounded slightly to 4.7% in December, only partly reversing the sharp decline of the previous month. The broader U6 […]

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