What a difference a month makes. With the previous indicator poll taken days before the US election, these results illustrate how managers have digested markets’ reactions to the outcome. If the pre-election responses could be described as cautious, post-election sentiment could be described in the increasingly familiar tone of the newest world leader, as “really, really amazing”.

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expectations dec 2016 key


% predicting rise (previous month) 19 (14)  8 (7)   9 (10) 15 (13)
% predicting stability (previous month) 18 (31)  54 (62)  39 (47) 37 (48)
% predicting fall (previous month) 63 (55)  38 (31)  52 (43) 48 (39)

Five months ago, expectations that dollar bond prices would fall were the lowest in over two years. Since then, the number of managers expecting falls has increased to the highest level in a year. The theme is continued across all denominations; as expectations of bond price declines increase. It was only yen bonds where expectations of declines were not the consensus majority. Even there, however, expectations of decline rose to match their highest level in two years.

bonds jauary 2017


% predicting rise (previous month) 45 (28) 54 (39) 49 (38) 47 (47) 33 (28)
% predicting stability (previous month) 45 (52) 34 (51) 36 (48) 41 (44) 48 (48)
% predicting fall (previous month) 10 (20) 12 (10) 15 (14) 12 (9) 19 (24)

In the past, when the split between those who expected US equity prices to rise or fall was as large as it is currently, the difference was within a reasonable range of the prior month’s average. That is not the case now. The number expecting US equities to rise increased at the fastest rate in over two years, and the portion expecting a fall declined by a similar amount. Even more respondents expect euro-zone equities to rise, the result of a large positive shift. 

equities jan 2017

japan equities jan 2017


% predicting rise (previous month) 63 (52) 62 (52) 58 (53)
% predicting stability (previous month) 30 (39) 27 (38) 30 (32)
% predicting fall (previous month) 7 (9) 11 (10) 12 (15)

The last time cumulative expectations for the dollar to strengthen against the euro, yen and pound were this large, it was not unanimous that the dollar would rise against each individual currency. In fact, at no time in over two years have expectations for the dollar to rise been this large and at the same time been so similar across each individual currency. My interpretations do not span the life of the survey; however, it would be surprising if there was another month where so many shifted to be so sure about a cross-asset-class scenario as now. That scenario being rising equities, declining bonds, and a strong dollar.

currencies jan 2017

currencies 2 jan 2017

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Supporting documents

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