Perspectives Blog

Inflation — The usual suspects

Zach Pandl, Portfolio Manager and Strategist | August 11, 2014

…ator inflation for the countries shown in the next chart). We think this slowing very likely reflects the second eurozone recession and the resulting increase in slack in labor and product markets. This point comes across most clearly when looking at the differences in inflation across countries. Exhibit 2 shows inflation in the GDP price index for 25 developed market economies plus the eurozone as of Q1 2014 (the latest available observation in…

Global Asset Allocation Outlook (as of February 24, 2014)

Columbia Management Global Asset Allocation Team, | March 10, 2014

Markets had a difficult start to the year. After experiencing negative returns in January, both U.S. and European equities recovered in February and are now slightly positive for the year. The best returns have come from U.S. small-cap equities along with shares of equities domiciled in the periphery of Europe. These two broad groups are both up mid-single digits. Emerging market equities continue to lag developed market performance. And, Japane…

ECB asset purchases — Bazooka or damp squib?

Martin Harvey, Fund Manager, Threadneedle International Ltd | September 22, 2014

With inflation expectations declining to the levels that preceded the recent shift in policy, should the ECB and the financial markets be worried? In our view, the ECB probably won’t be wholly impressed by the reaction of inflation expectations to recently announced measures, and will be keeping a close eye on favored measures. We believe that we would need to see a further significant deterioration in growth and inflation expectations to kick…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

Despite continuing headlines of concern, EM markets have rebounded recently. In order to sustain that rally, we need to see progress on export volumes and political/economic reforms. While not universally cheap, EM equity valuations are not unreasonable and we continue to find bottom-up opportunities. A month ago, much of the news from the emerging markets (EM) was negative. We saw headlines highlighting the liquidity headwinds created by U.S….

Emerging Markets: Waiting on exports

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | March 31, 2014

Exports by emerging market economies are the most important factor in explaining long-term growth. EM exports have remained sluggish for the past three years due in part to the subpar nature of global growth. As emerging markets struggle to overcome the challenges to their growth story, the EM landscape will likely face significant challenges ahead. Equity markets in the developed world did very well in 2013 while the picture was far more mixe…

Special report – 2014 mid-year review and outlook

Columbia Management, Investment Team | June 16, 2014

Key investment professionals review the first half of 2014 and share their insights into what may be ahead for the second half of the year. Interest rates Zach Pandl, Portfolio manager and strategist Review: Government bond yields declined in early 2014, both in the U.S. and in other developed market economies. This surprising change in course after increases in 2013 caught many investors off guard. In our view, declining interest rates reflect…

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…