Perspectives Pictet

Recent rises in benchmark bond yields have caused us to revise upwards our year-end forecasts for US Treasury and Bund yields.We have revised our year-end target for the 10-year US Treasury yield from 1.7% to 2% and for the 10-year German Bund yield from 0.08% to 0.3%.Since the end of September, markets’ inflation expectations have rebounded, with euro and USD 5Y5Y inflation swap rates and 10-year breakeven yields rising. This rise is due to several factors, the most obvious one being the...

Other data have been more mixed and our forecast for U.S. growth remains unchanged for Q4.The ISM Manufacturing index increased modestly in October, to 51.9 from 51.5 in September, slightly above consensus expectations (51.7). However, following a sharp increase to 57.1 in September, the Non-manufacturing index fell back to 54.8 in October, below consensus expectations (56.0).The rebound in the ISM manufacturing index over the past two months confirmed that the declines in the dollar’s...

The statement at the end of the Fed’s latest policy meeting did hint at increasing inflation and seemed to prepare the ground for a December rate hike.As widely expected, the Federal Open Market Committee (FOMC) remained on hold at its policy meeting on November 2 meeting and there were only slight modifications in the FOMC statement.The Fed modestly upgraded its assessment of inflation and provided further hints of a December rate rise, saying that the case for a hike “has continued to...

In spite of prospects for a moderate upturn, monetary policy is clearly showing its limits, with structural reforms needed to improve Japan’s economic outlook.At its latest policy meeting on November 1, the Bank of Japan (BoJ) elected to keep its “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control” policy unchanged and did not announce any further easing measures. In addition, the BoJ revised the trajectory of its inflation projections downward to better reflect...

October data suggests China continues to regain momentum, justifying our decision to raise our growth forecast for this year. But we still expect growth to slow in 2017.China’s purchasing manager indices (PMIs) rose strongly in October. Both the official and the Caixin manufacturing PMIs came in at 51.2 , reaching their highest levels since August 2014. The official non-manufacturing PMIs also rose noticeable in October. The strong figures indicate that the improving growth momentum in China...

[embedded content] Published: Tuesday November 01 2016The third Next Generation event took place in Geneva with 50 Next Gens in attendance from 22 different nationalities.The event was a great success, focusing both on the challenges and solutions the rising generation face in todays complex environment. Presentations offered both solid educational platforms and fostered lively workshops, providing a unique opportunity for like-minded peers to exchange opinions and advice. Among Pictet...

The third Next Generation event took place in Geneva with 50 Next Gens in attendance from 22 different nationalities. The event was a great success, focusing both on the challenges and solutions the rising generation face in todays complex environment. Presentations offered both solid educational platforms and fostered lively workshops, providing a unique opportunity for like-minded peers to exchange opinions and advice. Among Pictet expert speakers we had the pleasure of welcoming, Kathryn...

Amid conflicting wage signals and low inflation expectations, core US prices look like rising only gradually to end 2017.Core US personal consumption expenditure (PCE) inflation remained stable at 1.7% year on year (y-o-y) in September, in line with consensus expectations. We continue to believe that core PCE inflation will pick up modestly over the coming months. Our forecast that it will reach 1.9% y-o-y by year-end and 2.1% in December 2017 remains unchanged.Labour market slack has...

With the ECB still concerned about weak dynamics in core prices and wages, we believe a 6-month extension of QE will be announced in December, with asset purchases of EUR80 bn per month.Euro area flash HICP inflation rose from 0.4% year on year (y-o-y) in September to 0.5% in October, while core inflation remained stable at 0.8%. Both figures were in line with market expectations. However, the details behind the core inflation figure were slightly weaker than expected.Euro area inflation is...

3Q GDP growth in the euro area met expectations. The play off between strong business indicators and weak-ish credit dynamics means we maintain our full-year growth forecast of 1.5% in 2016.Euro area real GDP expanded at a quarter-on-quarter (q-o-q) rate of 0.3% in Q2 (1.4% q-o-q annualised, 1.6% year on year), in line with expectations and our own forecast. This comes after GDP growth of 0.3% q-o-q in Q2 and 0.5% q-o-q in Q1.Looking ahead, risks to our scenario for the euro area economy...