NN IP: Fears and Fragility

Economic Outlook
The Fed’s journey into unconventional territory

Last month, the Fed lifted its policy rate off the zero lower bound. This however does not mean that the US central bank has left unconventional policy territory. We start this year by offering our readers a short history of the Fed’s journey into unconventional territory.  Read more

Asset Allocation
Well-known fears expose ongoing market fragility

Market volatility has increased again at the start of the year due to intensified worries over Chinese growth weakness, geopolitical tensions and a further fall of the oil price. Although a lot of bad news is already priced in, we prefer to maintain a cautious positioning. We neutralised our equity overweight.  Read more

Fixed Income
Defensively positioned into the new year

Investors in spread products remained cautious at the start of the new year. Themes that dominated at the end of last year continue to dent sentiment. Most important of these are continued oil price weakness and monetary policy divergence between the Eurozone and the US, where the Fed has now enacted lift-off. Renewed downward pressure in Chinese equity markets following disappointing PMI manufacturing data for December added to already negative sentiment.  Read more

Equity Strategy
Weak start of the year for equity markets

There is not the faintest sign of a positive New Year effect this year. On the contrary, markets faced their weakest start in many years, following an already weak month of December. Several catalysts can be identified, but taken in isolation, none of them looks to be important enough to warrant the size of the drop.  Read more

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