Current Perspectives

 

Worried About Rising Rates? Go Global

US-only bond investors are affected by one business cycle, one yield curve, one monetary policy. As long as interest rates were falling, that was good. But it doesn’t sound so good now.

Getting More from Low Market Volatility

Stocks still seem attractive, but it’s important to guard against a potential spike in market volatility. Today’s low-volatility environment happens to be a good time to shop for downside protection.

Need Income? Let’s Talk

Investors and their advisors know how tough it is to generate income in today’s low-interest-rate world. Forthright and frequent conversation about how far they’re willing to go to boost returns can help.

Is the Air Getting Thin for Japanese Stocks?

The rapid surge of Japanese equities in recent years has left many investors worried that they may have missed the bus. We believe big changes underway can support further profitability improvements and push the market higher.

It Pays to Be Choosy in Emerging Markets

Emerging equities remain rich in return opportunity, in our view. But as their recent whiplash behavior illustrates, capitalizing on this potential will require far greater selectivity than it did in the past.

Economic Perspectives

 

Housing: The Next Shoe to Drop?

Australasia :: Up until now, housing has been one of the bright spots in Australia’s economic rebalancing story. But as supply dynamics start to shift, the outlook for this sector is set to become more gloomy. Even as some of the negativity fades from the commodity picture, there are still plenty of reasons to think Australia’s economy will continue to underperform.

The Long Growth Cycle: Can It Become the Longest?

US :: June represents the six-year mark for the current growth cycle. That’s already longer than the postwar growth cycle average. Yet the economic and financial characteristics of the current cycle suggest we’ll see several more years of growth. And the odds are better than even that this cycle will last at least as long as the longest on record.

Rising Credit Growth Points to Falling Deflation Risk in the Euro Area

Europe :: The recovery in the euro area continues to gain traction, but can the improvement be sustained once the tailwind from lower oil prices starts to fade? In our view, a rebound in household and company borrowing is a strong indication that monetary policy is starting to feed through to the real economy and deflation risks are starting to recede.

Thailand has Room for further rate cuts

Asia :: Although the Bank of Thailand appeared to have finished cutting interest rates, we believe that renewed signs of economic weakness justifies a further easing. Political uncertainty will limit fiscal policy, and previous rate cuts have not filtered through into the economy. The local yield curve looks attractive, given that the recent bond sell-off was based on assumptions that there would be no more rate cuts.

Colombia: Many Policy Challenges

Latin America :: A decline in Colombia’s terms of trade has helped slow the pace of growth and widen the country’s current account deficit and fiscal imbalances. If oil prices don’t rebound, more currency depreciation or additional adjustments will soon be needed.

In the News

 

Liquidity risk is manageable and can offer opportunities: AB

Liquidity risk—or the danger that investors will be unable to trade in securities at the time and price of their choosing—has become a much greater challenge for investors, and could hurt bond investors in particular as interest rates rise.