- UK and US inflation figures miss expectations
- Federal Reserve increases Funds rate
- US economic data softer than expected
- Bank of England votes 5-3 to hold the base rate
- French party En Marche! secure convincing parliamentary majority
Imperium Capital Publication
Viewpoint – June 2017
The benign conditions that have prevailed in markets through the past six months continued into May, with most risk assets producing positive returns. Equity markets again produced the best returns, led by the UK, Europe (especially peripheral markets) and Asia, but bond markets also made solid progress, as yields drifted lower and credit benefitted from a favourable corporate backdrop. Perhaps the most notable features, however, were a further slide in the US dollar, which fell 2.2% in May on a trade weighted basis, taking its fall to 6.1% from its early January peak and reversing all of the post election surge; as well as a further drop in the oil price in the face of stubbornly high global inventory levels and evidence of surging oil shale production in the US. Also notable was the continuation of extraordinarily low levels of volatility across markets, with the VIX ‘fear’ index hovering at ten year lows, punctuated only very briefly in May by concerns that the Russia/Trump scandal could lead to a further weakening of the President and his ability to implement some of his reflationary and business friendly policies and even lead to his impeachment.
Weekly Digest – 11 June 2017
- Conservatives fall short of majority in UK election
- ECB revises core inflation and growth forecasts
- Limited market response to Comey testimony
- Strong US economic data reaffirms rate hike expectations
- US responds to Qatar and Gulf diplomatic crisis
Weekly Digest – 04 June 2017
- Equities higher with volatility falling
- Bond markets rise after muted inflation data
- UK polls indicate tight race ahead of Thursday’s election
- US May payrolls report disappoints
- Trump takes US out of Paris Climate Accord
Viewpoint – May 2017
In another good month for risk assets generally the pattern of performance and market leadership has shifted significantly. Following Donald Trump’s election victory in November the US equity market led the world up sharply, with the ‘reflation trade’ accounting for much of the rise. However growing evidence that winning Congressional approval for big policy initiatives such as tax cuts and reforms, and huge spending on infrastructure will be very difficult has meant the US market has stalled. Although the S&P 500 returned 1.0% in April it has traded sideways for two months. At the same time the USD has weakened against all major currencies on a trade weighted basis.
Weekly Digest – 21 May 2017
- Pressure builds on Trump and equity markets
- US dollar index back to pre-election levels
- Brazilian asset prices fall amid corruption scandal
- Japan experiences steady Q1 growth
- Sterling climbs on UK inflation and employment data
Weekly Digest – 14 May 2017
- Global equities flat as volatility nears record-lows
- US inflation slows in April
- Gilts higher after BoE downgrade growth forecast
- US & China outline 100-day trade plan
- Merkel’s CDU Party win key state election in Germany
Weekly Digest – 7 May 2017
- Macron becomes youngest ever elected French President
- Strong April jobs report points to robust US labour market
- Eurozone economy grows 0.5% in first quarter
- Greece agrees bailout terms with creditors
- Volatile week for commodity prices
Weekly Digest – 23 April 2017
- Equities & Euro up following first round of French election
- May calls snap UK election
- Flash PMI’s encouraging in Europe, less so in US
- UK retail sales decline in March
- Poor week for oil as US inventories rise
Viewpoint – April 2017
Despite a mid-month wobble in the US equity market, it was another benign month overall for equity markets and most risk assets made further upward progress, continuing the pattern of performance since Trump’s election success. Volatility remained remarkably low, and equities again outperformed bonds. The most notable moves included a change in leadership within equity markets, with Europe meaningfully outperforming the US, credit marginally outperforming sovereign bonds (which posted flat or negative returns), and a renewed slide in the US dollar against most currencies, leaving its trade weighted index down by 1.8% year-to-date. Despite further evidence of strengthening global growth, commodity markets were generally weak, notably the price of WTI oil declined by 6.3% over the month. A combination of accelerating growth and a weaker dollar helped emerging markets to another strong month, leaving them as the best performing equity market year-to-date (posting a total return of 11.4%).