Investor confidence in the global outlook for monetary policy, economic growth and inflation has kept volatility contained. Can it continue? We think the risk of a destabilizing policy error is low if central banks remain cognizant of global financial conditions.
In late May, OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC oil producers agreed to extend production cuts through April 2018 in the face of oil inventories that remain well above average. While one would have expected a positive market reaction, many investors believed deeper cuts were necessary and the market has sold off sharply since the meeting.
UK politics are not stable after last week’s general election. When Prime Minister Theresa May called for a snap election in April, she sought to reaffirm her political mandate as Brexit negotiations launched.
Emerging market (EM) assets were hit hard by the crash in commodity prices in 2014-2015, but so far this year, EM and commodity performance have diverged. EM is one of the top-performing asset classes across global markets despite flat commodity prices. This doesn’t square with the market rule of thumb that EM tends to perform in line with commodity prices. I believe strong EM performance can continue if we begin to see global demand for commodities materialize; otherwise, this divergence could reverse.
A synchronized pickup in global economic activity has lifted the spirits of businesses, consumers and investors worldwide. Though many equity markets are near 52-week highs and credit spreads are near multi-year lows, corporate profits are now growing again in most countries.
Markets breathed a sigh of relief as centrist Emmanuel Macron won the French presidency on Sunday, May 7. Despite the seemingly good news, Italian bonds sold off as investors prepare for turbulent Italian politics ahead.
Global markets breathed a collective sigh of relief last week when it became clear that Geert Wilders' anti-European Party for Freedom (PVV) did not win the most votes in the March 15 Dutch election.
The global auto industry completed a successful year in 2016, driven by solid sales performance in the US, China and Western Europe.
So far, the market’s reaction to Turkey’s historic referendum on the adoption of a national presidential system on April 16 has been positive, with local bonds and the currency rallying. Despite a slim margin, this was a major win for President Erdoğan and the Justice and Development Party (AKP).
How might the new administration make good on its promise of a lower corporate tax rate? The House has proposed funding the cut with a new border tax on imports (BAT).