EM

The Daily Update - US rising rates but lower long term growth and creditworthiness

With a Federal Funds Target Rate hike expected later today, futures markets have already priced in a 25bp rise following recent strong data, hawkish official comments and waning of external risks. Indeed with USD10bn already shorting Blackrock bond ETFs, announcement swings (if any) could go either way. Focus instead will be on the trajectory of future hikes and any words on future balance sheet reductions. Given that 3-4 hikes were expected in 2016 (and considered gradual back then) a rate rise today supports a similar expectation for the Fed for this year. Three rate rises this year still look more likely than four and we expect any balance sheet reductions will come with the next hike; downplaying their significance.

The Daily Update - China still not an emerging market?

It seems China will have to wait another year and push further reforms in order to satisfy the requirements of MSCI that would allow its A-Shares to be classified as Emerging Market. Such a reclassification has been impending for years and yesterday MSCI again postponed the inevitable – awaiting increased capital market accessibility and transparency. It had seemed more likely now than in previous years considering the accelerated reforms of the past 12 months (which mollified the IMF sufficiently to include the Chinese renminbi into the SDR in November 2015).

Wealthy Nations Daily Update - Emerging Markets and The US Rust Belt

Antoine van Agtmael, the man who coined the term “Emerging Markets” is, along with journalist Fred Bakker, releasing a new book called “The Smartest Place on Earth”. In it they challenge the prevailing views of emerging growth spots – views of course which Mr Agtmael helped to pioneer in the first place but which are now 35 years old. The thrust of their new thesis seems to be that untold future growth potential lies, no longer primarily in less developed and distant shores but, in regions which can combine their underutilised brainpower and infrastructure to capitalise upon new opportunities of innovation. Areas like the US “Rust Belt” stand to benefit in a period where, “the global competitive advantage is shifting from cheap to smart”.

Wealthy Nations Daily Update - Fed, Policy unchanged

Having effectively backed itself into a corner to pull the trigger in December, the Fed unsurprisingly left rates unchanged yesterday. Aside from a stronger job market, US economic activity remains mixed (for example, durable goods orders fell -5.1% in December versus market calls for -0.7%) and as we are all aware, inflation is tracking below their 2% target. Sounding relatively upbeat about the state of the domestic economy, the data dependant Fed added that any policy decisions will now also be tied to markets; stating it will be “closely monitoring” global economic and financial development.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.