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IPE Expectations Indicator June 2017

When fewer than one in 10 respondents expects something to happen, it is hard to accept it could happen. There is an increased number of such instances in the most recent IPE Asset Manager Expectations poll.

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screen shot 2017 06 16 at 15.27.07

 

key for expectations graphs 2


Bonds

 $¥£
% predicting rise (previous month)11 (11)9 (4)8 (2)11 (7)
% predicting stability (previous month)26 (23)64 (62)43 (43)30 (29)
% predicting fall (previous month)63 (66)27 (34)49 (55)59 (64)

After reaching a historically low point for negative sentiment towards bonds, an increasing number of managers expects euro bond prices to continue to fall/yields to rise. There is a similar trend for expectations on the levels for yen and sterling bonds. While expectations for yen and sterling bonds are not at historical lows, improved sentiment has boosted expectations for rising bond prices/lower yields. While the consensus remains for global bond yields to fall, the possibility of yield rises/price drops is no longer at historically pessimistic levels.

bonds 1 jun 17

bonds 2 jun 17


Equities

 USEuro-zoneJapanAsiaUK
% predicting rise (previous month)40 (44)75 (74)57 (57)56 (56)27 (30)
% predicting stability (previous month)47 (42)23 (23)36 (30)37 (33)55 (50)
% predicting fall (previous month)13 (14)2 (3)7 (13)7 (11)18 (20)

Asset managers are indicating two trends they expect to persist, and one new trend that is gathering pace. Holders of euro-zone and Asian equities will be happy with these results, while US equity investors may be concerned. Positive sentiment continued to increase for euro-zone equities for the seventh consecutive month, to a 16-month high. Only 2% of managers expect euro-zone equities to decline. The trend of favourable sentiment towards Asia equities has been steadily rising since the end of 2015, and it has been over two years since negative sentiment towards Asian equities was so low.

equities 1 jun 17

equities 2 jun 17


Currencies

 $/€$/¥$/£
% predicting rise (previous month)37 (42)40 (53)47 (54)
% predicting stability (previous month)43 (38)43 (32)31 (29)
% predicting fall (previous month)20 (20)17 (15)22 (17)

Belief in dollar strength continued to fade in the most recent survey. While a dollar decline is not the primary expectation for any of the currency pairs, the expected relative strength of the dollar weakened in each. Relative to the euro, expectations for dollar strength declined for the fifth consecutive month. Relative to they en it is lower than any point in the last 31 months, and relative to the pound it is below its volatile 12-month average.

currencies 1 jun 17

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