Benedicte Gravrand, Opalesque Geneva:
According to Pioneer Investments’ latest Global Markets Strategy Report, out on Friday, the key macro points to watch out for right now are (1) the US Fed’s orderly scaling back of QE (conditional on an improving economy); (2) the fragmentation in bank lending markets in the Eurozone, which may cause it to need further stimulus; (3) QE in Japan, and its structural reforms; and (4) China’s policymakers’ efforts to curb excess bank lending and speed up a consumer spending growth model.
The €165 billion global investment firm’s base case rests on US interest rates rise on strong economic growth; it is overweight in equities and underweight in bonds. The main challenge that it foresees, lies in US interest rates rising on higher inflation.
The Fed’s tapering will be gradual and depend on economic growth, the report says. "Nevertheless, the prospect of an end to such a liquidity boost as QE may increase volatility in financial markets until the first interest rate rise actually happens, probably next year." The end of QE should not be worrying, according to Pioneer, although some investors, used to loose policies, may react negatively to it and this could force a rate hike "sooner rather than later." But the investment fir......................
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