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IPE Expectations Indicator May 2017

A key metric for interpreting manager expectations is the difference between those expecting a rise and those expecting a fall. Having data to analyse, trends, trend shifts and historical highs and lows helps make things clearer. While there are many themes worth noting, there is only one universally negative point, which is historically low and in a strong downtrend. 

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expectations feb 2017 key

Bonds

 $¥£
% predicting rise (previous month)11 (13)4 (7)2 (9)7 (9)
% predicting stability (previous month)23 (23)62 (61)43 (32)29 (30)
% predicting fall (previous month)66 (64)34 (32)55 (59)64 (61)

Bond prices continue to arouse negative sentiments. The cumulative difference between expectations of prices rising and prices falling dropped one point below its 30-month low. This has been the trend since October 2016, but it is being driven by low expectations of sterling bond prices rising (only 2%) and euro bond prices rising. The latter is the most negative and persistently negative trend among all the data. One thing is clear – sentiment is negative toward euro bond prices.

bonds may 2017

 

Equities

 USEuro-zoneJapanAsiaUK
% predicting rise (previous month)44 (48)74 (70)57 (63)56 (54)30 (36)
% predicting stability (previous month)42 (39)23 (24)30 (28)33 (38)50 (48)
% predicting fall (previous month)14 (13)3 (6)13 (9)11 (8)20 (16)

The post-US election surge in expectations of rising equity prices, noted last month, has continued to fade. In fact, the only region where sentiment rose is the euro-zone. The positive sentiment for euro-zone equities remains below its 30-month high from December 2015 but the trend is positive.

equities may 2017

equities 2 may 2017

 

Currencies

 $/€$/¥$/£
% predicting rise (previous month)42 (44)53 (49)54 (46)
% predicting stability (previous month)38 (38)32 (33)29 (39)
% predicting fall (previous month)20 (18)15 (18)17 (15)

Confidence in dollar strength is fading. Compared with the euro, expectations of a dollar rise (while still the majority view) has fallen to 30-month low, while the proportion expecting a dollar decline against the euro are at a 30-month high. Elsewhere, dollar versus the yen is weak, but not historically so, and the only support for the dollar is coming relative to the sterling, where stability between the currencies is at a 30-month low.

currencies 2 may 2017

currencies may 2017

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