Schroders Economic Infographic Jan 2015 Desynchronised cycle Disinflationary boom

Marketing material
Schroders Economic Infographic Jan 2015
Desynchronised cycle
Disinflationary boom
Divergence in monetary policy with
US leading Japan & Europe
Rate rise
June 2015
Set to keep
rates low
QE expected
in March 2015
Stronger growth
+ lower inflation
Oil prices
have fallen
Lower oil prices also reflect
lower demand in 2015
Lower oil and energy acts
like a tax cut to consumer
Near-term concerns for capital
expenditure in energy sector
US + UK sales figures suggest
energy dividend is already
coming through
Increased volatility in oil related
currencies and credit
Saudi decision
to maintain supply
Positives are set to outweigh the negatives resulting in
higher growth and lower inflation
Continuation of a
stronger USD
commodity prices
Weaker emerging
market equities
Implication for bonds
FED has reduced bond buying
Long-end of yield curve (10 and 30 years)
remained surprisingly low
Japan - currency war win
Abenomics has
resulted in a
weaker yen
Increased profit
However, Treasury supply slowed due to reduced budget deficit
International investors are looking to the US
in search of higher yields
Consequentially, overall yields should rise in 2015 with
short-end yields rising more than 30 year yields
Boosted Japanese
equity market
Export volumes
did not respond
Back to the 1990s
Japan now at
Exporters should
cut prices to gain
market share
This will help to
boost exports...
put money into
US tech stocks
Domestic economy
USD strengthened
Greenspan’s FED
distracted by
external events
Sluggish growth in
China and Eurozone
Weigh on global inflation
Yellen may delay
rate tightening
Equity markets
Russia default
Tech bubble
FED cut rates
Liquidity bubble?
Rates stay close to zero
Reinforce recovery
in the economy...
And reverse the long-term
decline in global trade share
Important Information: Schroders has expressed its own views in this document and these may change. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The
material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations.
Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the
document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the
amount originally invested. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be
taped or monitored.