Why 2017 UK inflation fears are overdone

UK inflation in November came in higher than expected, but we think that concerns over a damaging rise in prices over the next 12-18 months are overdone. On the face of it a sharp rise in inflation looks likely, with worrying implications.  UK imports account for 30% of GDP and trade-weighted Sterling is 15% lower … Continue reading “Why 2017 UK inflation fears are overdone”

A chance to bond with China?

Around $155 billion could start flowing into China’s local-currency bond market in the coming year if renminbi-denominated debt is added to influential bond indices as a reward for recent efforts to grant greater access to foreign investors. Over the past year, officials have expanded the types of foreign investors who can invest in the so-called … Continue reading “A chance to bond with China?”

The euro on the ballot paper?

What impact will the looming elections in Europe have on the euro and the markets? Revolts against the political establishments of advanced countries are becoming commonplace. The Brexit and Trump decisions have so far been positive for shares in the UK and US, despite big doubts and unhappiness for many in markets on the news. … Continue reading “The euro on the ballot paper?”

Going global – and back again

Every year has its upsets, but 2016 seems to have thrown up more than most. With the Brexit referendum, with the election of US President Trump, and with the continued rise of insurgent populist movements elsewhere in the developed world, it feels as though we are heading for an economic and political crunch point. As … Continue reading “Going global – and back again”

How low rates affect stockmarket returns

History offers lessons on how low rates – and equity market valuations – might affect returns. The world has been living with low interest rates for eight years but such periods are not new. Both the US and UK saw rates below 1% for most of the two decades spanning the Second World War, while … Continue reading “How low rates affect stockmarket returns”

Europe: political events in Italy prelude to the eurozone’s demise?

Last night, the Italian Government was heavily defeated in a referendum over changes it had proposed to the country’s constitution. This led to the resignation of Prime Minister Matteo Renzi and has thrown significant uncertainty over the country’s political future. Italy’s president has begun the process of selecting a new prime minister to form a … Continue reading “Europe: political events in Italy prelude to the eurozone’s demise?”

Can the emerging markets revival continue?

A panel of experts from Schroders reflect on the revival seen in emerging markets this year, and discuss whether it is set to continue in 2017 in the wake of the recent US presidential election result. Will the US election result hamper the emerging markets revival? Given the uncertainty over US policy under President Trump, … Continue reading “Can the emerging markets revival continue?”

Will the UK consumer keep spending?

There have been alarms put round that the UK will witness a big squeeze on real incomes, leading to a reduction in consumer demand. The argument goes that the devaluation of the pound will cause substantial price increase, which will eat into wage increases and cause a fall in real incomes and spending power. The … Continue reading “Will the UK consumer keep spending?”

Autumn statement 2016: will the sums add up?

The EU referendum result casts a long shadow over the chancellor’s 2016 Autumn Statement, resulting in a surprisingly modest downgrade to the economy’s growth prospects but a sharp worsening of its fiscal outlook. Within these tight parameters, Mr Hammond has done what he can: setting new fiscal rules, highlighting the UK’s long-term challenges, and raising … Continue reading “Autumn statement 2016: will the sums add up?”

Donald Trump and the prospects for US investment markets

Donald Trump’s victory is an event that could one day be looked back upon as a generational turning point in global politics. In this article, we take a step back from the headlines and examine how his election could affect the trends already underway in the US economy, ultimately to determine how investment markets might … Continue reading “Donald Trump and the prospects for US investment markets”

Volatile bonds: What is happening to interest rates?

This year the US, UK and German bond markets have moved together. Whatever the news, rates have followed similar trends and patterns. It is true US rates have stayed the highest of the three, and German rates by far the lowest. In each market rates fell from their highs on 1 January to reach new … Continue reading “Volatile bonds: What is happening to interest rates?”

Trump’s policies can’t stop the fastest growing economies in the world

Donald Trump is set to become the next president of the United States and the world has to grapple with the implications. Emerging economies, among the biggest beneficiaries of globalisation, are watching with trepidation as the self-styled architect of ‘Brexit-plus-plus-plus’ threatens to undermine a rules-based international system of trade and investment that took decades to … Continue reading “Trump’s policies can’t stop the fastest growing economies in the world”

Has QE failed, and if so why are markets clamouring for more?

The aim of Quantitative Easing [QE] was to support global economic growth in the wake of the Global Financial Crisis, and help to push GDP growth back towards its trend rate, typically around 3.2 – 3.5% for the world and 2 – 2.5% for the UK. This would allow the amount of outstanding debt to … Continue reading “Has QE failed, and if so why are markets clamouring for more?”