The vote in favour of leaving the EU by the UK means one thing above all: uncertainty. Because the effects on the sentiment and the behaviour of companies, the public, the financial market participants, and the political parties are difficult to predict. Paradoxically, the prices of risky assets such as equities, corporate bonds, and emerging […]
On 23 June the people of the UK voted in favour of an exit from the European Union. Basically the UK thus strengthened its supposed (?) state sovereignty at the expense of the economic advantages of an EU membership. For the rest of the EU, its economic and political clout weakens as a result.
Risk-averse markets The classic indicators on the capital market suggest rising risk with respect to the economy and risky assets. Spreads have widened, and the yield differential between long-term and short-term government bonds has fallen; volatility has increased. Also, the inflation rate priced in has decreased, the Japanese yen and the Swiss franc have appreciated, […]
The financial environment has brightened up. Equity and commodity prices have increased. At the same time, spreads and (implied) volatilities have declined. The positive development across many parts of the world has been supportive to the optimism of investors with regard to an improvement of the economic environment. In conjunction with the surplus liquidity, they […]
Equities have recovered from their beginning-of-year slump, and bonds, especially corporate and emerging markets, have recorded impressive gains. The loosening of the monetary environment in China and the continuation of the loose monetary policy in the USA have reduced the risk aversion of investors. In terms of asset allocation, we generally prefer default risk. Equities […]
The US central bank signalled the continuation of its loose monetary policy at its FOMC meeting on 27 April. This is remarkable given that along with the short-term stabilisation of the Chinese economy, this Fed policy is one of the most important reasons for the price rises of risky assets since February.
The recovery from the slump on the equity markets we saw at the beginning of the year is coming to an end. The rally is losing steam. The search for new supporting factors in addition to the expansive central bank policies is difficult. In line with the general strategy “sell on highs”, we took the […]
The Council of the European Central Bank (ECB) further loosened its monetary policy on 10 March 2016. In view of the decline of the leading economic indicators and the excessively low inflation in the Eurozone, the bundle of measures introduced by the ECB is necessary. But, to paraphrase Mohamed El-Erian, the expansive central bank policy […]
The economic indicators are falling but do not suggest a recession. The central banks are implementing expansive measures in order to fight deflation risks and to stabilise the financial markets. Hence, the data is slightly better than capital markets were expecting. This gives room for a little breather.
The United States are currently in the spotlight, given the primary elections for the US presidential election in November. But what does the US economy look like at the moment?
