3 Things The European Investment-Grade Fixed Income Team Talked About Last Week

4631166771. Europe – On the One Hand, On the Other Hand…

The general market perception of the European economy is of a slow-growing, inefficient economy that would benefit greatly from structural reforms. It was therefore a considerable surprise when the Q1 2016 GDP released last Friday, showed that the Euro area had grown by 0.6% on a quarterly basis, or 2.2% on an annualised basis. This was the joint strongest in the currency economic cycle, and almost double what is widely considered the area’s trend growth rate, whilst expectations had been for a 0.4% print. Domestic demand appears to have been the big driver of the improvement, which bodes well for the economy going forward, whilst exports look to have slowed significantly – no real surprise given the state of the global economy. Bear in mind that the growth rate in the U.S. for the same period was only 0.5% quarter on quarter, so the Euro-area is out-pacing the U.S. Unfortunately, before the ECB could pat themselves on the back for a job well done, the latest inflation numbers showed that European inflation fell back into negative territory, printing at -0.2% for April, below market expectations. Equally disappointing was the fact that core inflation fell back to 0.8%, again below expectations and below the average for H2 2015. The complete lack of inflationary pressures will be a cause of significant worry to the ECB. Whilst inflation break-evens are currently at attractive levels, we still need to see some catalyst to push them higher before implementing any long positions.

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European Fixed Income: Still Value in Euro Subordinated Debt

Quarterly Outlook 2016

Tanguy Le Saout

Head of European Fixed Income

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U.S. Equities: Remain Positive, but Expect Greater Volatility

Andrew Acheson

Portfolio Manager, Leader of the U.S. Growth Team

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European Equities: Room to Deliver

Quarterly Outlook 2016

Diego Franzin

Head Of Equity – Europe

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FOMC Statement: A More Positive Tone

Federal Reserve BuildingAs expected, and in keeping with the minutes from its March meeting, the Federal Open Market Committee (FOMC) decided to keep rates on hold. Importantly, the Federal Reserve Board cited several aspects of the US economy and global conditions that leaves the door ajar for another June or July rate hike.

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