Perspectives Blog

Implications of a stronger U.S. dollar

Matthew Cobon, Head of Government and FX Investments, Fixed Income, Threadneedle Int'l Ltd | October 27, 2014

The U.S. dollar could continue to perform well, but there is a short-term case as to why dollar strength could be accompanied by more asset class volatility. Currency markets are moving ahead of what interest rate markets are telling us, so there is a disconnect. Things could become very challenging for the Fed if the U.S. starts importing deflation from elsewhere. The asset class volatility argument is related to global liquidity being withdra…

Special report – Commodity markets outlook

Columbia Management, Investment Team | July 21, 2014

…some form of insurance or to diversify against their own currency risk are less concerned about buying the U.S. dollar than was the case. This is certainly true of the emerging markets. Just a few years ago central banks in emerging markets were buying gold as a diversifier. However, in the past year or so emerging market central banks have focused on addressing domestic problems and have required dollars, rather than gold, to support their curr…

Global asset allocation outlook (September 2014)

Columbia Management Global Asset Allocation Team, | October 6, 2014

…particularly in September, has been negative across a widespread array of asset classes as we have seen the U.S. dollar exchange rate rise with increasing intensity in recent months. The worst returns, not coincidentally, were delivered by the very assets that have shown historically high sensitivity to dollar strength. This disruption to currency stability in general, and the particular importance of a rise in exchange value for the world’s rese…

Asset allocation: Q4 equity strategy

Columbia Management Global Asset Allocation Team, | October 27, 2014

…ounce. Japanese equities are up about 3% year-to-date in local currency terms but have performed quite poorly in dollar terms. The yen has declined about 7% against the dollar. The BoJ is continuing with its bond buying QE program, but this may not be enough to reflate the economy. From an equity point of view, however, Japanese equities have an advantage over European equities. Valuations in Europe have expanded with little evidence of strong ea…

Millennials, are you ready to take the next steps?

October 9, 2014

As a group, Millennials are intensely conservative when it comes to investments. Avoiding equities and saving cash in lower yielding, lower risk accounts is jeopardizing Millennials’ long-term financial security. Starting to save for retirement in early adulthood ensures a longer time horizon for investments to grow. Millennials, the generation in today’s workforce born after 1980, experienced the tech bubble and burst of the 1990s, and entere…

The importance of taking a long-term perspective

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | February 3, 2014

…ear horizon (driven by global growth expectations and attractive current valuations) we might find confidence to use extreme weakness in the near term to build strategic holdings for the longer horizon. Maintaining a realistic set of expectations for long-term asset class performance is a key part of our investment process. These expectations can help us to make rational decisions in the face of market volatility. The research that underpins thes…

Release the doves

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | October 20, 2014

The Fed (and all central banks) is highly sensitive to shifts in inflation expectations by either consumers or the markets. The one-year TIP breakeven appears to be pricing in some deflationary pulse and is also pulling down longer term inflation expectations across the curve. My expectations for growth are unchanged at 2.5%-3.0%, but I am concerned there may be some larger shortfall in demand next year for some reason we do not yet know. Whil…