Based on how far the US term premium has fallen, to see any further meaningful decline in bond yields we’d need another downside macro shock.
Reports - Full Archive
The following pages contain chronological lists of articles that have been written by Independent Strategy. Independent Strategy’s research is available by annual subscription. For details of subscription rates and soft dollar payments, please contact Independent Strategy by using the contact form.
The Australian economy has had a great run, avoiding recession for almost three decades. Most macro indicators are in reasonable shape. But there are three risks looming. First, high levels of household debt and heavy exposure to residential housing put domestic demand under the spotlight.
The slowdown in global growth has been accompanied by an inversion of the US yield curve — the one recession indicator that always enlivens markets. While statistically the curve is an excellent forecaster of downturns, there is much to suggest things might be a little different this time.
People are always keen to write off China. Its authoritarian regime has built up malinvestments and debt beyond that of any other emerging economy, both in nominal terms and as a share of GDP. Even its GDP is often deemed to be over-inflated. But we are not on the cusp of a collapse. For a start, China’s financial system still has relatively closed circuitry, with the money being owed mostly by state-owned enterprises (SOEs) to state-owned banks, meaning relatively modest connectivity to the wider world.
Fears of a new cold war with Russia have not been fully realised, even if relations remain strained. Europe is…
More than 12 years after the start of the global financial crisis (GFC) central banks do not feel able to…
Faltering growth and undershooting inflation expose the contradictions of the ECB’s current policy approach. Despite Draghi’s insistence, they remain well…
Global activity is on the back foot. World trade has been weakening for months and the economic soft patch has turned into a more prolonged slowdown, certainly in Europe and Asia.
There is an assumption that demography is a slow-burn theme that can be filed away for the long term. But working age populations are already shrinking in many of the major economies.
The collapse of Spain’s centre-left government has sounded the alarm bells. The country will now go to the polls in April, its fourth election in eight years. However, this does not mean populist parties are about to take over.
Despite positive noises on wages from both the Fed and the ECB there is little sign we’re returning to the…
We’ve expected Sweden’s political and monetary policy shifts to give the Swedish krona (SEK) a boost. And it did for…
The Fed has shifted policy on the path for the Fed Funds rate and the normalisation of its balance sheet.…
US equities have hugely outperformed their international peers over the long haul and other US financial assets in the short…
Chinese data suggests the trade war is biting. This is focusing minds in Beijing, meaning some kind of deal between…
There have been various points of blame for weak auto sales. The most under-appreciated input has been technological innovation, as…
America’s trade conflict with China reflects two things. First, the angst of a declining US power. Second, the ego-centric conflict…
Europe is suffering from a noxious combination of slowing growth and rising political risk. It also has a central bank…
Unlike most geopolitical phenomena, populism is not a high-impact low-probability event. It is hard to run your life (or portfolio)…
The ECB has a fine line to tread, since its forward guidance is out of kilter with the slowdown in…
The markets have been given two adrenalin shots to boost the Santa Claus rally: Fed Chairman Powell’s statement that the…
The recent decline in UK house prices is principally function of Brexit-related uncertainty. You’d have to be mad to buy…
Global economic growth has peaked almost everywhere. This cancels most of our long-term fixed income shorts, with the exception of…
Globalisation was not a perfect process. While it hefted living standards emerging markets, the trade-off was a stagnation of incomes…
This is not a report that tries to divine its way through the UK’s shambolic political scene. Instead, it examines…
Despite Germany enjoying full employment, a budget surplus and generally solid economic performance, there is little faith in the grand…
We are going short the euro versus the Us dollar. And some investors may consider going long gold versus the…
The world is now a degree warmer on average than in pre-industrial times and at current linear (and thus possibly…
Millennials are a diverse bunch that share as many differences as they do similarities. Where comparisons are useful is in…
Bavaria goes to the polls next on Sunday (October 14th). Regional elections don’t usually matter much, but this one is…
Stability in markets is often self-reinforcing but as the cycle tops out we start to see divergences. We seem to…
Rising bond yields might have forced the populist Italian government to moderate its tone ahead of next year’s budget, but…
Sweden’s general election should allow the anti-immigrant Sweden Democrats to take a further step forward. But the centrists will rally…
Turkey is bust and will get more so. However, with the risk of capital controls imminent, it is time to…
It’s undeniable that we’re living in an epoch of technological transformation. And one that is unprecedented in history. With the…
North Korea can go four ways from here. 1) Nothing changes. 2) Voluntary unification (German style). 3) Implosion. 4) Or…
Policy measures taken by the Chinese authorities show they are serious about combatting risks to growth. These were the consequence…
The buoyant Japanese labour market is finally generating some wage pressure. But Japanese demographics have created a structural demand deficit…
Europe’s debt crisis led to some meaningful banking sector reforms. Efforts to recapitalise and improve balance sheets by disposing of…
Prospects for a quiet summer look slim in Italy. Tensions between the coalition partners will rise as expensive election promises,…
The Trump protectionist threat is the most likely cause of the next financial rout. The rot will start in equity…
Prime Minister Theresa May has long insisted that the UK would leave both the Single Market and the Customs Union.…
China’s economic model is rebalancing towards domestic demand. While not without its risks, at the moment this shift is proceeding…
China recorded a rare current account deficit in the first quarter. This isn’t likely to mark the start of a…
Kim Jong Un has proven to be an adept diplomat, turning the risks of developing an operational nuclear deterrent into…
President Trump’s withdrawal from the Iranian nuclear deal was expected, but that doesn’t make it less of a gamble. The…
The reflation trade has taken on renewed urgency this year as the late-cycle fiscal stimulus delivered by the White House…
Democracy is under attack. This calls into question the global leadership of the world’s most significant rich economies. From within…
The merits of our carry trade basket have faded over the past 12 months. There remains a yield pick-up in…
