Can rotation into small caps be sustained? July saw a dramatic rotation in the US stock market out of all-conquering megacap tech stocks into small caps. While a market rebalancing would be welcome, gathering economic and political uncertainty point to volatility ahead, which is a headwind for riskier small caps. For
Bonds back in favor: Will it last? As we headed into 2024, the stage seemed set for a rousing rally in US bond markets. A combination of soft economic data releases and a dovish surprise from the Fed Chair Jerome Powell, following the FOMC’s December 2023 press conference, appeared to signal an end to
Leveraged finance boom draws scrutiny from regulators The leveraged finance market has seen explosive growth in recent years, benefiting from high interest rates and strong risk appetites, reflected in tight credit spreads. But with the size of this market now estimated by some at around USD 2 trillion globally, the boom is prompting heightened
Endgame for US Basel III negotiations The shockwaves from the Global Financial Crisis (GFC) are still apparent, at least in the sphere of regulation, with the US banking industry currently engaged in an unprecedented lobbying campaign against proposed new rules to Basel III – Basel IV or the so-called “Basel Endgame”. In
European equities back in vogue Beset by multiple crises and lackluster growth for over a decade, European equity market underperformance had become ingrained in investor expectations. However, since bottoming out in October 2022, they have been a surprise outperformer. Can this last? For the best part of 15 years, a litany of
AI and NVIDIA drive markets boom Since the launch of ChatGPT-3 in June 2020, AI has captured the public imagination in a manner like no technological development since the Internet. The widespread availability of ChatGPT-3 and subsequent enhanced versions, along with a constant stream of other AI products coming to
Inflation divergences: Implications for monetary policy Inflation dynamics across developed economies are diverging. US inflation data has come in “hot” so far in 2024, but inflation in Europe has eased, falling short of expectations. While the Fed is opting to look through the data for now and sticking to its
Best execution: US looks to eliminate conflicts Toward the end of 2023, two US-based broker-dealers were subjected to multi-million dollar penalties levied by the Financial Industry Regulatory Authority (FINRA) on grounds of failure to provide “best execution” to their customers. The timing of these sanctions coincided with the introduction by
Renewables growth strong but still off required pace The world increased its global renewable energy capacity in 2023 by around 500 gigawatts (GW) to over 4,000 GW, according to the International Energy Agency (IEA). While this rate of growth in capacity (50% higher than in 2022) – the fastest in
Navigating inflation: Soft landing on a moving target Amid strong signs that the aggressive tightening cycle implemented by monetary authorities to combat inflation may have run its course – with interest rates set to head lower later this year – markets are jubilant. However, some central bankers and economists caution that these celebrations
