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The ECB moves to keep euro bond yields down

Since Mario Draghi in June signalled the European Central Bank’s (ECB) readiness to embark on more easing should the euro area economy fail to regain speed, euro sovereign bonds yields have fallen across the board, with the 10-year Bund yield briefly moving below -0.4% (the same level as the deposit rate) in intraday trading on […]

World trade and manufacturing hit by tariffs

Global manufacturing sentiment deteriorated further in June. Markit Economics’ World purchasing managers’ index for manufacturing fell to 49.4 from 49.8 in May, the second month in a row it was below the 50 threshold, suggesting that global manufacturing activity is contracting. One needs to go back to 2012 to see something comparable. Even if the direct impact of […]

Weekly View – The dark horse wins

Christine Lagarde stole headlines this week with her unexpected nomination to succeed Mario Draghi at the ECB. Equities and bond markets rallied sharply around the world on the news. Given Ms Lagarde’s past history of support for the ECB’s easy monetary policy, her appointment was taken as confirmation that the ECB will continue on its […]

House View, July 2019

Asset allocation Although the US-China ‘trade truce’ and dovish central banks are giving a short-term fillip to equities, our analysis suggests that expansion of valuations from here is limited, making us globally cautious on equities. But we see opportunities in high-quality stocks in individual sectors We remain underweight government bonds given low yields, except US […]

Trade and disinflation keep central banks dovish

Global central bank rhetoric has turned even more dovish lately, encapsulated by the latest Federal Reserve (Fed) meeting and the European Central Bank (ECB) policy forum in Sintra, both in June. With global manufacturing slowing and inflation failing to pick up much, the Fed has signalled clearly that its next move might be a rate […]

A truce between Rome and Brussels

In its mid-year budget revision, the Italian government lowered its 2019 deficit target. The government pointed to better-than-expected revenues for this revision, including tax revenues that were EUR3.5bn higher than expected and an additional EUR2.7bn in other revenues (including dividends from state-owned companies). Furthermore, public spending will be lower than projected this year due to […]

Fragile truce in Osaka

The US and China leaders agreed on a truce during their much-anticipated meeting at the G20 summit in Osaka this weekend. Bilateral trade talks will restart. Trump put to bed the threat of additional tariffs, although the existing tariffs on roughly half of Chinese imports will stay at 25%. Importantly, Trump did not specify a […]

Weekly View – TIMEOUT

The headline event at last week’s G20 summit in Osaka was the bilateral meeting between the Chinese and US presidents to discuss trade. After their last meeting ended in a stalemate, the world waited to see who would be first to blink. The rather anticlimactic outcome was that both sides have agreed not to add […]

Swiss monetary policy – it’s (almost) all about the Swiss franc

How the Swiss National Bank (SNB) reacts to further stimulus by its US and European counterparts will be the key focus of the coming months for investors. We believe that the Swiss central bank will be reluctant to cut rates in direct response to the ECB, especially in the case of a small 10 basis point deposit rate […]

Weekly View – WHATEVER IT TAKES 2.0

Last week, Mario Draghi made waves in Sintra at the European Central Bank’s (ECB) annual symposium. The ECB president gave a very dovish speech, vindicating markets’ high expectations and eliciting Trump Twitter censure. Draghi came as close as possible without actually committing, declaring that the central bank stands ready to act by using all instruments […]

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