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The US yield curve has been flattening for a long period of time. The difference between interest rates on two-year and ten-year US government bonds was only 20 basis points in late September and had risen to 30 basis points by mid-October. This is generally considered to be a logical development, as the market has been assuming US economic growth will decline next year as the effect of fiscal stimulus fades and higher interest rates start to bite against a backdrop of soaring debts and a strengthening of the dollar exchange rate. Given this outlook, inflation will come under downward pressure next year, forcing the Fed to stop hiking rates or to start cutting them.
“If we cannot end now our differences, at least we can make the world safe for diversity.” – John F. Kennedy (10th June 1963)
What does rising populism mean for the future of Italy, the European Economic Union and global markets?
Will the game of musical chairs in the White House and Trump’s stance towards the rest of the world fan the geopolitical flames and what will this mean for global markets?
The Trump government believe its economic policy will result in a growth rate of 3%; economists believe this is more likely to be 2% at best. What then will be the real impact of US fiscal policy and what will this mean for markets?
With nation states ‘applying 19th century statecraft in a world of 21st century weapons’ it comes as no surprise that geopolitical risk remains the biggest concern for businesses around the world. What are the potential flash points and what might they mean for businesses?
There are several factors that have led to a sweet spot for financial markets (low inflation, loose monetary policy and the economic recovery) in recent years. However, these factors are now declining in force and will disappear or turn to negative.
Almost a decade ago, the political scientist Joseph Nye thought of the global balance of power and the changing game of international relations as a 3D chessboard. His underlying idea was that international power is shared between three imaginary ‘chessboards’ in an era of globalisation. The upper chessboard is set aside for military might. The US has been calling the shots in this respect over a considerable period. The middle chessboard is all about the economy. Here, several great powers are the important players at present. The third board is hardest to define. Power at this level is generated across borders and revolves around issues that are not directly connected to governments; ‘fuzzy power’.
It’s all change as the US tightens monetary policy and starts driving up rates in earnest. As the Trump administration looks to relax banking rules, is the world’s biggest economy really freeing up market forces?
Watching the people get lairy, it’s not very pretty I tell thee, walking through town is quite scary, it’s not very sensible either, I predict a riot, I predict a riot – Kaiser Chiefs.