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
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