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A trying time for euro

The euro broke to the downside from its tight trading range relative to the US dollar since the end of May. These new lows go against our expectations of a gradual appreciation of the single currency relative to the greenback in the second half of the year and indicate that we have underestimated the short-term […]

Weekly View – Turkish spillovers

Last week market volatility was driven by news headlines, rather than fundamentals. This was particularly evident in emerging markets (EM), which continued to underperform despite the stabilisation of the Turkish lira. Chinese internet company Tencent piqued investor nervousness after reporting disappointing Q2 results, against a broader backdrop of concern around slowing Chinese economic growth and […]

Europe chart of the week – Swiss franc

In April, the EUR/CHF rate (1 euro in Swiss franc) hit its highest level since the Swiss National Bank (SNB) decided to lift its exchange rate floor in January 2015. Since then, the Swiss franc has appreciated by 5.8% against the euro, mainly driven by political uncertainty in Italy and concerns that Turkey’s economic troubles […]

The global M&A value is running close to its 2015 peak

Mergers and acquisitions (M&A) activity has proven resilient so far this year, despite higher volatility and lower equity returns. However, the derating of equities has neither depressed target valuations nor premiums paid by acquirers, particularly in Europe. The acceleration of M&A in 2018 could even approach the previous peak reached in 2015, at around USD […]

Weekly View – “We have our people”

Last week, markets were troubled by the dramatic decline of the Turkish lira and the potential for the spread of contagion elsewhere in markets. The lira fell by 12% on Friday and 35% since the start of 2018 against the dollar. Emerging Market (EM) equities fell but overall losses for the week were limited. Elsewhere, […]

Europe chart of the week – Turkey

The rapid depreciation of the Turkish Lira is raising concerns at the European Central Bank over European banks’ exposure to Turkey, according to recent press reports. Data from the Bank of International Settlements (BIS) show that the total exposure of foreign banks to Turkish assets was USD223 bn in Q1 2018, on an ultimate risk […]

US CPI inflation still moderate

July’s US CPI data showed that underlying inflation remains moderate despite the strong economy, the tight labour market and the higher customs duties recently put in place by the Trump administration. The headline CPI print rose 0.2% m-o-m in July, keeping the y-o-y reading at 2.9%. This y-o-y print was still mostly driven by energy […]

US chart of the week – Job market is open

The latest job openings data release for June brought another positive signal for the longevity of the US business cycle, echoing other encouraging indicators from US data releases, including the July employment report (see our Flash Note and our ‘business cycle score’ derived from monthly payroll data). These data add further support for the continued […]

US-China trade tensions could persist

On 3 August, the Chinese government announced a list of additional tariffs on USD 60 billion worth of US imports in retaliation for the US’s proposed tariffs on USD 200 billion of Chinese goods. When these tariffs are implemented will depend on when the US activates its tariffs. The announcement came shortly after President Donald […]

Weekly View – new headwinds

Apple made headlines for being the first company to reach a market capitalisation of USD 1 trillion. This milestone highlights two key points about the technology sector, in particular the FAANGs (Facebook, Apple, Amazon, Netflix, Google) which dominate it. Apple and Amazon’s continued success stems from their highly diversified business, which makes them less dependent […]

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