The internationalization of China’s currency is proceeding hand in hand with the liberalization of the country’s capital markets. If China can surmount its short-term challenges, the impact of these reforms on global economies and markets should be profound. (more…)
It’s a powerful vision for the world’s future. The US and China: two growth powerhouses; two major currencies.
Darren Williams and Dennis Shen
Greece is holding early parliamentary elections on January 25. A victory for the anti-austerity Syriza party would probably trigger tense negotiations with the country’s official lenders and fresh volatility in Greek government bond markets. But the expected launch of ECB QE should mitigate contagion to the rest of the periphery. (more…)
The US economy shifted into a higher gear in 2014 as growth over the last three quarters averaged 4.5%. With consumer, business and even government spending set to rise, the outlook for 2015 is even brighter—and that should be enough to convince the Federal Reserve to start lifting interest rates.
December’s negative inflation print has led to a cacophony of headlines proclaiming that the euro area has finally succumbed to deflation. We think concerns about modest declines in consumer prices are overdone. But the structural weakness of nominal growth remains a major concern. (more…)
John Taylor and Dennis Shen
Europe’s bond markets are starting to focus on the potential impact of ECB sovereign-bond purchases. While we expect QE to prompt a further narrowing of peripheral European sovereign-bond spreads, it’s important to stay focused on country fundamentals when selecting exposure. (more…)
Darren Williams (pictured) and Dennis Shen
Markets are reacting badly to Greek plans to exit its bailout program early. Uncertainties are being heightened by the prospect of early general elections. The end-result has been a sharp sell-off in Greek sovereign bonds, which has raised fresh concerns about the potential for spillover from Greek risks to other peripheral markets. (more…)
By Fernando Losada (pictured) and Alexander Perjessy of AllianceBernstein (NYSE:AB)
Fixed-income investors often divide emerging markets into commodity exporters and commodity importers. We think this overlooks an important reality: commodity wealth is not the sole—or even the most important—driver of EM performance. (more…)
When the European Central Bank’s Governing Council convenes tomorrow in Frankfurt, there will be plenty of talk about Mario Draghi’s recent speech at Jackson Hole. Not only did this open the door to a large-scale quantitative easing (QE) programme, it may in time be seen as a pivotal moment in the evolution of the euro area’s policy framework as it attempts to fend off the forces of deflation. (more…)
By Hayden Briscoe (pictured) and Jenny Zeng of AllianceBernstein (NYSE:AB)
Concerns about a possible collapse in China’s property market continue to grow. However, our research suggests that fundamentals are more robust than many think. The biggest danger lies in the potential for policy mistakes. (more…)