It is getting repetitive at this stage but the unprecedented global central bank policy of low interest rates remains a key support for financial markets and has done for some time now.  Despite recent strength against a number of major currencies, euro currency weakness has continued to reward investors in foreign assets in 2015.  As it is likely that the US and the UK will begin to raise interest rates towards the end of the year, volatility in markets may increase from current low levels.


  • Equities (in euro terms) fell in April, following an incredible run of fourteen positive months in-a-row, with much of the damage caused by euro currency strength. Markets were, however, adversely affected in the last week of the month by bond market weakness as well as some profit-taking. On a technical basis, the global index (in euro terms) dipped below its 50-day moving average but remains well above the critical 200-day moving average.
  • The German 10-year bond yield rose in April from an all-time-low of 0.18% to 0.37%. Equivalent US rates rose from 1.92% to 2.03%. The gap between the German and the US 10-year yield remains close to its highest level since German re-unification.

Currencies & Commodities:

  • Commodity prices overall were up by 5.4% (in dollar terms) in April, led by a sharp rise in over-sold oil prices, and have now regained all of the losses earlier in the year. Oil rose by well over 20% due to short-covering by hedge funds.
  • The euro currency strengthened against most of the major currencies following a long period of weakness. The €/$ rate moved from 1.07 to 1.12 over the month.

The house view remains fairly static, we expect the Federal Reserve to keep interest rates at record low levels until December 2015, with a small chance of a rate rise in September. The Bank of England is not expected to move until closer to year-end or early 2016 and Europe remains a long way off any indication of a hike.

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