Market Analysis

Market wrap Risk appetite remained firm into month-end. US equities continued a rally which effectively started in March 2009, rising 0.2% to a fresh 2½ year high. An easy Fed and Q1 company earnings remain the current catalysts, Friday’s solid report from Caterpillar which was driven by developing country sales one indication US companies are participating in the fortunes of growth countries. US banks and financials were less impressive, though, as some high profile banks are being probed by

Consumer confidence (Apr): unchanged after massive drop FOMC meeting: possibly changes in the wording, and press conference with adjusted projections GDP (Q1): slower growth rate due to harsh winter weather and high energy prices ISM indices (Apr): at robust expansion levels Labour market report (Apr): another payroll increase of more than 200k New home sales plummeted by 17% mom to a new low of 250k in February while median home prices declined by 8.9% yoy. The weakness in new home sales is

EMU economic sentiment and industrial confidence (April): more or less unchanged German CPI inflation (April): higher M3 money supply (March): increasing EMU inflation flash estimate (April): unchanged German retail sales (March): stable German labour market (March): adjusted unemployment set to decline sharply again In April, EMU industrial confidence might have improved somewhat, but EMU consumer confidence is not expected to be revised significantly. Thus EMU economic sentiment could have

It becomes easy to see how one event could become a trigger for others. And, at this juncture, it is difficult to assess the final impact of Greek debt restructuring and the final reach of the chain of events, particularly because it is as yet unknown how the restructuring will

Housing starts (Mar): recovering somewhat Leading indicators (Mar): slight increase Philadelphia Fed index (Apr): downward correction The NAHB index improved modestly to 17 in March, but was still far below 50, thus indicating that many more builders view conditions as bad rather than good at present. Given the unfavourable development of housing starts, the relatively low level of building permits and the ongoing downward trend in house prices, we expect the NAHB index to have remained

The dominating theme on the currency market remains relative monetary policy with the most visible implication being the depreciation of the dollar and not least against the euro. However, the clear trends seen over recent quarters are at risk of coming across bumps in the road. We look at

The rest of this year should see large swings in currencies, with each of the three super-major currencies facing huge challenges in the coming quarter. Namely, in the US: how will the Federal Reserve deal with the anticipation of the phase-out of QE2 and will it provide hints of QE3+?

Last week’s European Council meeting had generated expectations for a strong response from European governments to the debt crisis. • Although progress was made on a number of areas such as the establishment of the European Stability Mechanism (ESM), key aspects for the short-term evolution of the crisis were unaddressed

The developed economies of the world are faring very differently in the wake of the global recession. The economies of Australia and Canada are firmly in expansion territory, while economies in the Eurozone and the United Kingdom are still striving to get output back to pre-recession levels. The U.S. economy

In this paper we look at the economic effects and consider different scenarios for the Japanese nuclear crisis and the effects on the global economy. The main takeaway is that it will take a very substantial decline in Japanese GDP in order for it to have a material impact on global

While the tragic events following the recent earthquake in Japan combined with continued unrest in the Middle East and North Africa region have the potential to de-rail global risk sentiment, we maintain our view that medium- to long-term euro support remains intact. Hence, we still look for EUR/USD to reach

The past month has seen a number of key event risks materialise for the global economy. An earthquake, followed by a tsunami, has hit Japan hard, with a return to technical recession now looking likely. After falling initially, the Japanese yen has held up against the US dollar as domestic

The recovery has proven solid, with fixed investment and personal spending growing at pre-crisis rates. Job growth continues to lag, but an imminent upturn is on the cards. Household spending should grow at a solid pace in 2011. The tax deal approved by Congress in December more than offsets the drag

Investors are navigating through murky waters once again as the reality of strengthening economic activity faces off against the risks emanating from geo-political events, Europe’s ongoing sovereign-debt issues and increasing inflationary pressures in some emerging markets. The key question is whether to focus on the actual data reports that confirm

Portugal is the poorest country in western Europe with GDP per capita at 59% of the euro area-average. Portugal has a long history of weak growth combined with large and permanent government budget deficits. In the past decade consumption and wages have been growing out of line with productivity. This

The ECB took the market by surprise by stepping up its rhetoric at last week’s meeting. Trichet used the famous wording ‘strong vigilance’ and ‘upside risks’ to signal that a first rate hike is imminent. The markets reacted strongly, sending rates up. Given this significant change in rhetoric and monetary stance