Market Views

Lower-for-longer Bank of Japan rates may benefit domestic reflation stocks. But potential opportunities may now be found outside the top flight of stocks

Many investors are looking into the crystal ball of term premia to predict the future path of interest rates. Traditional models may be doing us a disservice.

Hedge fund managers have seen weak alpha generation so far this year as markets grapple with uncertainty about the impact of higher rates and geopolitical turmoil. Looking ahead, they may capitalise on greater dispersion and possible higher volatility.

The inverse link between real rates and the equity multiple. The same for gold. The positive correlation between credit conditions and real GDP growth. All these relationships have recently broken. Re-coupling would require some big moves. Will old flames be rekindled?

Looking to history for clues as to how stocks sensitive to government spending could perform.

We’re in the middle of reporting season and earnings now need to deliver to keep equity animal spirits engaged as surges in bond yields catch investors’ eyes.

When investors predicted a year ago that a recession was a sure thing, backlogs shored up Europe’s industrial sector. The backlog cushion is gone, new orders are elusive so where’s the alpha?

How effective are forwards in predicting the future Fed Funds rate?

Sam Altman thinks ChatGPT can increase productivity by 20%. We discuss how we monitor productivity ahead of the official data. Economy-wide, there’s not yet much to see.

Fifteen years of easy monetary policy has driven public and private debt to record levels, challenging central banks’ task to rein in prices. We may see the Fed and others implicitly raise their tolerance for inflation rates above 2%.

Lower buyback activity is a likely feature in a higher-rate world and suggests less support for prices than in recent years. That said, they’re not going away altogether.

Machine learning gives us new tools to help navigate how momentum and beta themes have been driving returns in the market; and central banks are keeping a watchful eye on Treasury basis trades.