Chart archive

210 (91-100)
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The past month was marked by a sharp sell-off in European rates as Bunds experienced one of the strongest corrections on record. Underlying the move was a repricing of the impact of ECB QE and a rise of inflation expectations, both underpinned by an improving macro backdrop in the Eurozone. Assets outside Europe were less affected, but the sell-off may just have been a precursor of future market tremors. The current fiscal, regulatory and monetary policy mix, while successful in avoiding excessive leverage, raises the risk of significant supply / demand mismatches and recurring spikes in market volatility. [more]
Concern over global growth momentum prevails. Weakness in the US has extended into Q2, raising worries that the soft patch may be deeper-rooted than initially expected. We view the slowdown as temporary, but it may prove enough to further lower growth expectations for the year. Weak data in China have also continued, and EM more broadly are struggling to gain traction. [more]
Global growth dynamics have shifted over recent months. The Eurozone has surprised to the upside, as domestic demand has benefitted from lower oil prices and an improving credit picture. In contrast, US macro data have continued to disappoint, with sub-2% growth likely in Q1 – although we see this weakness as temporary and expect 2015 growth around 3%. EM economies remain weak; China in particular continues to slow down gradually and we see a rising risk of sub-6% growth for a couple of quarters this year.Monetary policy remains supportive, with the wave of central bank rate cuts continuing across EM and some DM. However, developments at the ECB and the Fed continue to be the key areas of focus. The ECB has confirmed its strong commitment to its asset purchase programme and has started aggressively buying sovereign debt. Meanwhile, a more dovish than expected Fed has kept 2015 rate increases on the table but signalled that September, not June, is the likely start of its hiking cycle.Risk assets have performed strongly YTD, even in dollar terms. The ECB and the Fed will remain key drivers of performance in the coming months. ECB QE will continue supporting European assets, pushing equities higher and peripheral spreads tighter. Meanwhile, a cautious Fed will provide temporary support to EM assets, but volatility will gradually rise as we finally approach Fed hikes.In Europe, negotiations with Greece have stalled since the 20-February agreement. We still expect a compromise and no Grexit. But as liquidity for banks and the government dries out the risk of capital controls continues to rise. Uncertainty will remain high, though the risk of contagion is now much lower than in 2010-12.The situation in Greece, just like the rise of Podemos in Spain or the Front National in France, highlight political risk in Europe. In a special report we take a closer look at the upcoming UK general election and why it matters for the UK and for the European Union. The election [more]
Greece is once again on centre stage. Tense negotiations between the new Radical-Left led coalition government and the country’s official creditors have dominated recent headlines. Despite heated rhetoric from both sides, Greece’s request for an extension of the original bailout arrangement marks a first step in what we expect will be a long road to an eventual compromise that keeps the country in the Eurozone. We explore this in more detail in this month's special report. [more]
The global economy will gather pace in 2015. Above trend expansion in the US will far outpace the weak and uneven acceleration in Europe, while growth in China will be slower but still high. Although global growth has fallen short of expectations since 2011, more optimism is warranted in 2015 as economic drags from recent years fade. Peak fiscal tightening in the US and the Eurozone is behind us, bank lending in Europe has stopped contracting, and the collapse in oil prices will effectively provide a tax cut for consumers across the globe [more]