ETF Securities Research Blog

Doha – Desert storm in a teacup

Expectations at the Doha OPEC Summit were for a simple rubber stamping of the agreement to freeze OPEC production but this didn’t happen. The scaling up or Iran’s production is unlikely to have much impact on global supply in the short-term with global supply falling into deficit in Q3-Q4 2016. Read more…

Central Banks set priorities: jobs first, pensions later

200275059-001Last week, Larry Fink (BlackRock) and Bill Gross (Pimco) emphasised the threat that negative interest rates policies (NIRP) pose to pension and insurance companies business models. Fink and Gross opine that negative interest rates would crowd out savers’ money from fixed income to cash. The IMF reacted by saying that the portfolio balance channel will just reallocate savers money from safe to risky assets. In March, inflows toward European high yield bonds and emerging markets have been the largest on record, €3.2bn and $9.09bn respectively, according to JP Morgan. But, part of these inflows are likely attributable to a rebound of oil prices in March (WTI oil price rose 13.6%).

If NIRP eventually endangers the business model of pension and insurance companies, we believe central banks can adapt in a similar way that the European Central Bank (ECB) has done with regard to European banks. Read more…

An important data week for China could provide an upside catalyst for commodities

Interpreting Chinese data releases for the months of January and February is always difficult because of the timing of the Chinese New Year (which can fall in either month). We gain a lot more clarity about the state of the Chinese economy with the March data releases that come out in April. We are hit with a wave of these releases this week: inflation, trade, money supply, loans, retail sales, industrial production and GDP.

Read more…

The latest IMF’s report highlights how important emerging markets are

blogDevelopments in emerging markets (EMs) account for more than a third of the variations in stock market and foreign exchange market returns worldwide, according to the IMF’s Global Financial Stability Report released last Monday. The financial spillovers – the extent to which EM equity returns are reflected in developed markets equity returns – have risen 28% (IMF estimates). For the largest emerging economies (Brazil, China, India, Russia and South Africa), they have risen by 40%. The spillovers on bond markets are less clear because bond flows have been strongly affected by monetary policies in advanced economies. Read more…