Falling growth and inflation expectations along with diverging central bank policies have been a significant driver of the volatility across bond/commodity/currency markets over the last 12 months. Despite predictions to the contrary, the fall in global manufacturing data has uniformly accelerated since the middle of 2014 to 2 year lows. The US remains the only developed country to still be experiencing YoY expansion in manufacturing conditions which along with the end to its quantitative easing program and the potential for rising rates on the back of improving employment data has seen the USD rally significantly. This of course has only accelerated the falls across the commodity spectrum and indeed with ~40% of US companies generating revenue offshore, will likely finish the run of positive US quarterly earnings growth spanning the last 2 years. With the ECB fighting deflation in Europe and China managing its own growth slowdown, it is difficult to forecast a major change in sentiment in the near term. Access the full report here: (VIEW LINK)

Nathan Lim

Do you have any thoughts on Japan? The PMI has clearly bottomed post the sales tax increase last year, employment remains a bright spot and the weak yen is helping exporters. While I probably wouldn't want to increase exposure to the inward facing part of the economy, exporters/industrial Japan looks interesting as well.