Highlights Negative Interest Rates: Time will tell if negative bond yields are indeed the “new normal”. We need to see negative yields maintained outside of a growth slowdown to prove that thesis. USTs & Bunds: U.S.…
Highlights Relative Growth & Inflation: Underlying U.S. and European economic growth momentum remains surprisingly similar, with weakness concentrated in manufacturing industries most exposed to trade uncertainty. Realized inflation…
Highlights So What? Economic stimulus will encourage key nations to pursue their self-interest – keeping geopolitical risk high. Why? The U.S. is still experiencing extraordinary strategic tensions with China and Iran…
Highlights When it comes to policy easing, the euro area 5-year yield at -0.15 percent is running out of road, while the U.S. 5-year yield is still at the dizzying heights of 1.8 percent. Hence, the ECB is likely to come out the loser…
Highlights 10-year real Spanish and Portuguese bond yields have already fallen below the neutral rate of interest for the entire euro zone. This suggests monetary conditions could now be favorable for all euro zone countries. Should…
Highlights Huge imbalance #1 is the euro area’s $150 billion trade surplus with the United States. Huge imbalance #1 has resulted from the ECB holding interest rates at the lower bound while the Fed tightened policy. The upshot…
The barrage of bad news in the past 24 hours is impressive. As the U.S. is extending its blacklist of Chinese companies, fears are growing that a resolution to the trade tensions is more elusive than ever. Moreover, Japanese…
Highlights In the second half of 2019, economic growth will stop accelerating… …but an underpinning of equity valuations will limit sell-off magnitudes to around 10 percent or so, rather than deeper sustained plunges.…
Here’s the paradox: while the level of German exports is very high, it has been flat-lining at this elevated level since 2012. Hence Germany is no longer deriving any structural growth from its export sector. Germany…
Interestingly, emerging markets (EM) versus developed markets (DM) has followed a near carbon copy profile, albeit the outperformance was front-end loaded. Can this continue? Recent history is not very encouraging. Since the…