Inflation

With disinflationary pressures building in India, it may only be a matter of time before interest rates start to fall materially.

Global investors have regained a strongly bullish stance on the outlook for equity markets in the second half of 2014, according to the BofA Merrill Lynch Fund Manager Survey for July.

US equity and bond markets have performed in-line over the past few weeks. As a result, the correlation between 10-year rates and the S&P 500, which had turned positive since the announcement of Fed tapering (steepening rates and stronger equity markets), is now weakening once again.

The strong demand in the primary market confirms what is already well known: whatever the inflation expectations, there is significant structural demand, notably from “buy and hold” investors such as pension funds, for bonds indexed to inflation.

The EU ETS’ stock image shows a huge industrial plant that emits a large amount of greenhouse gas, and gives the impression of an allowance market that does not concern so-called “diffuse” sectors like agriculture and forestry. Like any stock image, it is broadly accurate and partially false.