8 Aug 2013
Flash: 300 years of BoE history – BAML
FXstreet.com (Barcelona) - Michael Hartnett, Chief Investment Strategist at BofA Merrill Lynch notes that in 300 years of history, the Bank of England's base rate has never been lower than the 0.5% of the past 4 years (and new BoE Governor Carney wants to keep it there for a few more years).
“The degree of policy stimulus and intervention in global financial markets is historically unprecedented and has been and continues to be extremely positive for asset prices. But in the next year, the ability or otherwise of policy makers to finally deliver above-trend economic growth in the US, UK, Europe and Japan will determine the fate of asset prices”.
“The breakout of equities from their long-run trading range, the 120bp rise in 10 year Treasury yields and the significant decline in gold prices suggest investors are discounting the beginning of a stronger economic recovery after a period dominated by deflation, debt deleveraging and default risk following the Great Financial Crisis. Our base case remains that growth will pick-up, to the benefit of equities versus bonds. Bank stocks, Europe and Japan are our favoured picks to play the on-going Great Rotation”.
“The degree of policy stimulus and intervention in global financial markets is historically unprecedented and has been and continues to be extremely positive for asset prices. But in the next year, the ability or otherwise of policy makers to finally deliver above-trend economic growth in the US, UK, Europe and Japan will determine the fate of asset prices”.
“The breakout of equities from their long-run trading range, the 120bp rise in 10 year Treasury yields and the significant decline in gold prices suggest investors are discounting the beginning of a stronger economic recovery after a period dominated by deflation, debt deleveraging and default risk following the Great Financial Crisis. Our base case remains that growth will pick-up, to the benefit of equities versus bonds. Bank stocks, Europe and Japan are our favoured picks to play the on-going Great Rotation”.