Focus

Risk assets are exhibiting an exceptional degree of resilience and equity markets are clearly saying that President Trump is good for corporate profits. Markets are expecting a fiscal boost from the new President, which will drive an increase in corporate profitability and earnings – a positive for equity markets, all… Read More »

In the Eurozone, although base effects and energy prices continue to support headline inflation, core inflation trends remain subdued and are likely to keep the ECB on the back foot for the majority of this year, especially given the heavy political calendar. That said, once French elections have passed, the… Read More »

Markets seem concerned that a Marine Le-Pen presidency could lead to France leaving the EU. That would be good for gold and bad for French and peripheral debt and Eurozone equities. However, we are more worried about such an outcome in Italy and bookmakers seem to agree. For those able… Read More »

After two months underweighting most bonds except US investment grade, the tactical portfolio is taking a neutral position on rising interest rates and inflation expectations. Political uncertainties around the world are growing and may last longer than the market expects. While the divorce between the UK and the EU remains… Read More »

Doubts are increasing about the US policy mix, and the hopes of much fiscal stimulus and little protectionism that have buoyed markets since the election may not be how things eventually work out. Based on the new administration’s first two weeks, caution looks warranted. Two weeks into a new US… Read More »

Among the 19 eurozone sovereigns, we rate 16 in the investment-grade category (‘BBB-‘ or above), while three–Portugal, Greece, and Cyprus–are speculative grade (‘BB+’ or below). Over the past six months, we have raised the ratings on Cyprus (to ‘BB’ in September) and Malta (to ‘A-‘ in October). This extended a… Read More »

With so much happening in parallel across political, economic and financial landscapes, it seems daunting to try to identify the one event that shaped 2016. In the following short statements, our investment experts share their predictions on which events will prove pivotal in 2017. Fed and ECB in the spotlightMonetary… Read More »

The year 2017 is likely to mark the return of inflation to Europe. The combination of higher oil prices and the appreciation of the dollar against both the euro and the pound are already pushing headline inflation higher on the Old Continent. The annual Consumer Price Index (CPI) for the… Read More »

In the six months since the UK voted to leave the EU, on 23 June 2016, the economy has been remarkably resilient. But we think 2017 will see a harsher economic reality. The chart attempts to depict the process from here. As we go to print, the UK is still… Read More »

The reflation trade is on but, to HSBC, the market reaction jars with the economic realities in Europe.  Is ECB QE set to become an ‘ex policy’?There’s more than a whiff of Monty Python’s famous parrot sketch in the ECB’s current position.Like Michael Palin trying to persuade John Cleese that… Read More »