NN IP: Political risk events also present opportunities

Asset Allocation: More visibility on the path into uncertainty

Hints of a more confrontational US stance in the Trump presidency should be monitored closely and responded to quickly if they materialise, but it would certainly not yet be prudent to take pre-emptive action on these risk scenarios in the asset allocation stance. Underlying trends in the data and the drivers of investor behaviour are still supporting risky assets. Read more...

Economic Outlook: Strong cyclical momentum in Europe in the face of political risks

Despite structural deficiencies in financial institutions and a growing level of political uncertainty, domestic demand growth in Euroland is on a strong footing. Headline growth in emerging markets, meanwhile, is still holding up since the Trump victory but economic surprises have already deteriorated, particularly relative to developed markets. Read more...

Equity Strategy: Political risk events also present opportunities

With OPEC striking a deal on oil output cuts, the market focus shifts to the next risk event which is the Italian referendum on Sunday. Markets seem to have priced a “No” vote of the Italians. As sentiment towards Italian assets is already poor, we may well get a post-event rally irrespective of the outcome. Read more...

Fixed Income: Trump win is bad news for emerging markets

Since Donald Trump won the US elections, EM currencies have depreciated and EM bond yields have increased. Capital flows have sharply deteriorated and a further increase in US bond yields may do a lot more harm, especially should the Fed start to sound more hawkish. Read more...