Strategy Liquidity across markets and macro environment

Market liquidity plays a crucial role in the stability of financial system and central banks across the world pay a close attention to the development of liquidity in all asset classes. In this report, we discuss what do currents liquidity conditions imply for the market health.

Opinion Saudi Arabia heading towards a post-oil era…

It has taken a long time to Saudi Arabia to embark on a reform wave, but it seems that after eight decades of oil dependency, and under the current context of sustained low crude oil prices that pushed Saudi Arabia into a budget deficit of nearly $100bn last year (15% of GDP), the time has come for the kingdom to think of a post-oil era.

Strategy Which assets will be on a roll until May?

Our recommendations proceed from three factors, which are that macroeconomic risks (US cycle, Chinese cycle, upturn in crude prices to around USD 40/bbl) will subside in the short term, that QE will be ramped up by the ECB (from EUR 60bn to EUR 80bn) and, finally, the risk of a British exit (23 June referendum).

Opinion Fed passes its turn

This had been one of the most eagerly awaited FOMC meetings, but in the end the Federal Reserve decided to pass its turn. The last time the Fed Funds rate was raised, back in June 2006, there was a far more compelling case, making the central bank's job a good deal easier: unemployment was even lower than it is now (4.6% vs. 5.1%) and inflation towered at 4%, while growth reached 2.7% and the 10-year rate stood at 5.1%.

Strategy Negative real rates likely to be a lasting feature in the Eurozone

According to René Defossez, Strategist at Natixis, it seems reasonable to assume that, to begin with, the European Central Bank will endeavour to keep the 10-year nominal swap as low as possible, which means that the breakeven swap will remain deep in negative territory. However, it is also likely that the breakeven swap will remain very volatile, maybe more so, given the change in the global environment...