Back
30 May 2014
Markets setting scene for strong risk rally in summer - SocGen
FXStreet (Bali) - Sebastien Galy, Senior FX Strategist at Societe Generale, concludes on his market analysis that the ground is being laid for a strong risk rally over the summer period.
Key Quotes
"The market outlook for the Fed funds rate is being revised lower, falling from a 3.5-4.0% range to 3.0%. Some central bankers at both the Fed and elsewhere are arguing the case for ‘new normal’ neutral rates that are lower than in the past. There is a case for lower neutral rates across the key developed economies, but if we change our minds again, when the talking stops and the rate hikes start in 2015, it could be messy."
"And indeed, low rates for longer could create more instability over the long term as the global search for yield lifts risk assets to unsustainable valuations. The good news, for now, is that with the ECB set to ease next week and US data likely to continue their post-winter recovery, we are setting the scene for a strong risk rally over the summer."
Key Quotes
"The market outlook for the Fed funds rate is being revised lower, falling from a 3.5-4.0% range to 3.0%. Some central bankers at both the Fed and elsewhere are arguing the case for ‘new normal’ neutral rates that are lower than in the past. There is a case for lower neutral rates across the key developed economies, but if we change our minds again, when the talking stops and the rate hikes start in 2015, it could be messy."
"And indeed, low rates for longer could create more instability over the long term as the global search for yield lifts risk assets to unsustainable valuations. The good news, for now, is that with the ECB set to ease next week and US data likely to continue their post-winter recovery, we are setting the scene for a strong risk rally over the summer."