Guide to the Markets - J.P. Morgan Asset Management

Guide to the Markets

Related Content

J.P. Morgan Global Liquidity
Today’s complexities require a dedicated liquidity partner committed to helping clients succeed through all market cycles.
Performance & Yields
J.P. Morgan delivers comprehensive solutions based on the unique investment objectives of your organization.
Liquidity Insights
View original research, reports and commentary from our portfolio managers, analysts, economists, and traders.

We are pleased to present 1Q19 Guide to the Markets. The Guide contains analysis of economic and market data through December 31, 2018, which presents a wide range of macroeconomic data which can help short-term fixed income investors assess market risks and position portfolios in the coming quarter. Highlights include:

  • The Reserve Bank of Australia left base rates unchanged for the 28th consecutive month in December and the comments were broadly neutral seeing the domestic economy “performing well”, while housing was facing headwinds from “tighter credit conditions” and “trade risks” have increased. However, the weaker than expected 3Q18 GDP rate has raised doubts about the central bank hitting its target growth rates in 2018 and 2019. Bank Bill Swap Rate yields increased along the curve during the quarter, and the Australian dollar underperformed U.S. dollar slightly.
  • The pace of China’s economic growth continues to slow due to domestic and international headwinds. Meanwhile, the decline in credit growth and shadow banking has weakened sentiment and undermined consumption and infrastructure investment. Despite the government shifting priorities from de-leveraging to supporting growth, recent monetary and fiscal stimulus is only expected to break the fall rather than trigger a rebound. Interest rates will likely remain low for the foreseeable future. The Chinese yuan stabilized ahead of the quarter end after hitting its recent weakest level against the U.S. dollar since the financial crisis.
  • The overall Singapore domestic growth remains solid, with global trade tensions as the key downside risk. With core Consumer Price Index trending higher, the Monetary Authority of Singapore tightening bias remains intact, with rising probability of further steepening of Singapore dollar nominal effective exchange rate (SGD NEER) path at the next monetary policy meeting. Singapore Swap Offer Rates (SOR) increased further and the curve flattened, pushing the SOR/Libor spread tighter at front end but wider at longer end of the curve. Meanwhile, Singapore Interbank Offered Rates were broadly unchanged. The Singaporean dollar depreciated versus the U.S. dollar.

As you consider these important topics, your Global Liquidity Client Advisor will be happy to share our market views and tailor liquidity solutions to best meet your needs.