Week in Focus
The catch-up process evident in many emerging markets now appears to have come to an end. Per capita GDP is no longer growing more rapidly than in developed markets, and this is set to continue as globalisation trends lose momentum and reform policy in many emerging markets becomes bogged down. In addition, rising US interest rates means that the decade of cheap money across the EM space is coming to an end.
Netherlands: How wild will it get with Wilders?
Geert Wilders’ anti-European PVV is expected to become the strongest single party in the general election on 15 March and will thus play a dominant role in Dutch politics. A “Nexit”, however, is an unlikely scenario.
Outlook for the week of 20 to 24 February 2017
- Economic data: The euro zone PMIs should indicate that the region’s growth pace is unlikely to change in the first few months of this year. In the USA, the upward trend in residential construction continues.
- Bond market: Political risks in the euro zone are likely to keep Bunds well underpinned through next week.
- FX market: EUR-USD is expected to continue fluctuating strongly in the coming days, with the release of the FOMC meeting minutes likely to ensure a slight uptrend in the USD.
- Equity market: The steep US yield curve and powerful global M1 money growth indicate that the equity bull market will continue into a ninth year.
- Commodity market: The price of Brent oil is expected to hover around 55 USD next week. While gold remains in demand as a safe haven, soybean prices should come under pressure.
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