Marketing material Schroders Economic Infographic Jan 2015 Desynchronised cycle Disinﬂationary boom Positives Divergence in monetary policy with US leading Japan & Europe US JAPAN EUROPE Rate rise June 2015 Set to keep rates low QE expected in March 2015 Negatives Stronger growth + lower inﬂation Oil prices have fallen considerably 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 indicating... Positives are set to outweigh the negatives resulting in higher growth and lower inﬂation Continuation of a stronger USD Weaker 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 2014 Abenomics has resulted in a weaker yen Increased proﬁt margins 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 2015 Japan now at competitive levels Exporters should cut prices to gain market share This will help to boost exports... Investors put money into US tech stocks Domestic economy robust 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 strengthened Russia default Tech bubble FED cut rates Liquidity bubble? 1990s 1998 2015 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.