16 August 2016

Earnings forecasts: Reassuringly stable?.

A rate increase and a rising market – but was it really dovish?

Having primed markets to fully expect a US rate increase, the FOMC followed through on the 15th March. If the aim was to deliver a rate increase without abruptly causing tighter financial conditions (code for declining equity and credit markets), then it was mission accomplished. Following the FOMC announcement the dollar eased against other currencies, bond yields fell and equity markets gained. However, despite comforting language within the statement we detected a more strategic, rather than data dependent, direction for US interest rates in the press conference Q&A.

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14 November 2016

Forward guidance - Trump style.

A rate increase and a rising market – but was it really dovish?

Having primed markets to fully expect a US rate increase, the FOMC followed through on the 15th March. If the aim was to deliver a rate increase without abruptly causing tighter financial conditions (code for declining equity and credit markets), then it was mission accomplished. Following the FOMC announcement the dollar eased against other currencies, bond yields fell and equity markets gained. However, despite comforting language within the statement we detected a more strategic, rather than data dependent, direction for US interest rates in the press conference Q&A.

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16 March 2017

Just what the Fed wanted.

A rate increase and a rising market – but was it really dovish?

Having primed markets to fully expect a US rate increase, the FOMC followed through on the 15th March. If the aim was to deliver a rate increase without abruptly causing tighter financial conditions (code for declining equity and credit markets), then it was mission accomplished. Following the FOMC announcement the dollar eased against other currencies, bond yields fell and equity markets gained. However, despite comforting language within the statement we detected a more strategic, rather than data dependent, direction for US interest rates in the press conference Q&A.

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25/05/2017
Equity strategy and market outlook May 2017

In this month’s strategy piece, Alastair George believes that global equity markets are being supported by declining inflation expectations pushing bond yields lower and consensus forecast for profits growth of 10%, which have remained intact throughout this year. While this Goldilocks period for equities may continue, there is a mutual inconsistency in expecting both robust profits growth and ultra-low bond yields to persist in the medium term. Therefore, even if our base case is for markets to gradually drift higher in the short term, we continue to believe equity risk should be selective, focusing on specific catalysts or event-driven situations as the current low-volatility environment is likely to incentivise further M&A activity.

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