Large global banks are transitioning away from Libor the quickest because of their access to resources, regulators and experience, according to researchers at Cadwalader, Wickersham & Taft and Sia Partners. The law firm's survey of 75 financial firms found that while US regional banks haven't made as much progress, they plan to specifically budget for the transition during the coming year.
The EU risks becoming "mostly the playground" for world powers if it doesn't step up on the global stage and become a true geopolitical player, Josep Borrell, the bloc's chief diplomat, says in a letter to government ministers. "We need to speak more the language of power, not to conquer but to contribute to a more peaceful, prosperous and just world," he wrote.
A survey by Natixis Investment Managers finds 83% of institutional investors expect a global financial crisis within five years. Although asset managers are alert to the risk, uncertainty about the macroeconomic outlook has prevented them from making meaningful change to portfolios, says Andrew Benton, head of northern Europe at Natixis.
The market for 5-year, 5-year inflation swaps indicates there is little faith in the European Central Bank's ability to maintain price growth at or around its target 2%.
The yield on Japan's 10-year bond has increased to zero, after being negative for nine months. The Bank of Japan has decreased bond buying and other stimulus, and growing optimism about a US-Chinese trade deal has reduced demand for haven assets.
Analysts say Chinese equity markets will likely outperform their rivals in Hong Kong next year amid continuing political uncertainty in the city. "The [Hong Kong] market lacks a catalyst, something exceeding market expectations, to reverse its downward trend," says Bocom International head of research Hong Hao.
Surging prices for pork and other food increased China's consumer price index by 4.5% year over year in November, the highest rate since January 2012, according to the National Bureau of Statistics. The producer price index declined 1.4%.
Positive data on jobs and unemployment, along with the prospect of the United States-Mexico-Canada Agreement being signed and evidence that the global economy is steadying are all indications of broadly upward market progress, writes technical analyst Wille Delwiche, CMT. "All expectations are that the consumer will remain economically healthy and the Federal Reserve will remain accommodative suggesting moderate but positive returns on the S&P 500," he comments.
The UK pound's rally against both the dollar and euro has reached a 31-month high, but technical analyst Trevor Charsley does not expect its dominance over the euro to exceed a top of 1.20. This week's UK election will have a major influence on the currency and Nomura analyst Jordan Rochester says it could shed as much as 4% on Friday if the opposition Labour Party wins, but adds that such an outcome could mean "short-term pain, potential long-term gain".
The healthcare sector has achieved a notable breakout and technical analyst JC Parets, CMT, contends: "Another 35% of upside in this sector would be consistent with historical moves in the past and would be perfectly normal." He adds that medical devices could be a particularly strong sub-sector as it has continued to show relative strength, even while the broader sector was moving sideways through 2018-2019.
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