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Macro Strategy and Economic Updates

macro strategy and economic updates

FAB Macro Strategy: Alphabet Soup

06 May 2020

With the global economy having been floored by COVID-19 over the past few months there is now much debate and argument as to whether the trajectory of the aspirational global economic recovery over the coming months might be ‘V-‘ or ‘U-‘shaped in nature, or indeed some other letter. In our latest macroeconomic strategy piece we analyze the prospects for such recovery post Covid-19

Simon Ballard, Chief Economist

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Macro Strategy - Race you to the bottom

10 March 2020

In light of the huge market moves seen overnight, led predominantly by the sell off in oil post Saudi Arabia's announcement of an increase in supply, and resultant correction across various asset classes globally, please find attached our initial read of the situation..

Simon Ballard, Chief Economist

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Negative bond yields - From Feast to Famine

12 February 2020

The global macro environment of the past 5 years, in the post sovereign debt crisis era, has seen a seismic shift in financial market dynamics, especially in the Eurozone as a result of central bank intervention. In this paper we explore the current and deepening metrics surrounding negative bond yields, and whether this is now a ticking time-bomb.

Simon Ballard, Executive Director & Chief Economist

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Thoughts on Coronavirus

03 February 2020

In this report we provide our thoughts on the potential implications of the Coronavirus on the global economy and markets. Please read on.

Simon Ballard, Executive Director & Chief Economist

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Top 10 Risks for 2020(Macro)

08 January 2020

While the macro spotlight was firmly on the shifting sands of monetary policy last year as the Federal Reserve cut rates three times, as well as on U.S./China trade tensions and the subsequent cuts to global growth forecasts for 2019 and 2020, we herewith now offer what we believe may be global markets’ Top 10 Macro Challenges for 2020. This list is not exhaustive by any means, but is designed to be thought-provoking as investors finalise their investment strategies for the New Year.

Simon Ballard, Executive Director & Chief Economist

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The House View on Rates (2020 Outlook)

18 December 2019

Our latest update on FAB’s ‘House View’ report in which we analyze our House View on Global Rates (2020 Outlook), entitled ‘Forecasting Breaks in the Clouds’.

Simon Ballard, Executive Director & Chief Economist


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Dissecting a Huge Night in U.K. Politics

13 December 2019

Our macro strategy reaction and outlook to the U.K. General Election results. We hope you will find it informative and useful.

Simon Ballard, Executive Director & Chief Economist
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Macro Strategy - Brexit Bulletin

20 August 2019

We have long held the view that given the split, divisive nature of the Brexit polemic that a hard, no-deal result would likely be the only feasible outcome. We see no way for a compromise to be achieved in time and of late, with the installation of the new Boris Johnson pro-Brexit administration, the market seems to be increasingly in agreement with us.

Simon Ballard, Exec. Director & Macro Strategist
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FAB Trader's View on Recent Market Volatility

08 August 2019

In the context of recent market volatility, the traders within FAB’s Global Markets team have provided their views and insights on interest rates, yield curves, currencies and oil.

FAB Global Markets
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Thoughts on GBP post Monday’s plunge

30 July 2019

With Boris Johnson having won the keys to No.10 Downing Street and the phrase ‘hard, no-deal Brexit’ being used by him and many of his government ministers, the market is now waking up to reality. We maintain our long-held view that a ‘hard Brexit’ will be the most likely outcome to the polemic, a scenario that GBP has not priced in.

Simon Ballard, Exec. Director & Macro Strategist
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The House View on Rates

19 June 2019

Our latest update on FAB’s ‘House View’ on U.S., Eurozone and U.K. interest rates. For each central bank (Fed, ECB and BOE) we discuss current macroeconomic conditions, challenges and opportunities facing policy makers and set out our 12-month outlook expectations for rates.

Simon Ballard, Exec. Director & Macro Strategist

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The House View on Oil

02 May 2019

Our current ‘house view’ on the oil market : Despite the sharp drop in Iranian and Venezuelan exports, global producers are still able to pump enough extra crude to prevent the market from breaking sharply higher in the near term. Equally, better coordinated action by the OPEC/NOPEC countries and the formalization of an ‘OPEC+’ structure, combined with steady demand growth should continue to ensure that a dramatic drop in prices will also be avoided. Thus we maintain our view, which was first expressed in January this year that crude prices should average US$60 (WTI) and US$70 (Brent) in 2019.

Glenn Wepener - Market Insights & Strategy

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The House View on Rates

30 April 2019

Our newly inaugurated publication, First Abu Dhabi Bank’s ‘house view’ on U.S., Eurozone and U.K. interest rates. For each central bank (Fed, ECB and BOE) we discuss current macroeconomic conditions, challenges and opportunities facing policy makers and set out our 12-month outlook expectations for rates.

Simon Ballard, Exec. Director & Macro Strategist

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The GCC - Facts & Figures

28 March 2019

In this report FAB’s Market Insights & Strategy team provide a very simple overview of the Gulf Cooperation Council (GCC) from a macro and markets perspective. The report covers an economic snapshot of the region, our outlook on oil, and a summary of the GCC FX and rates market.

Glenn Wepener, Simon Ballard, Mohamed Al Shamsi, Rakesh Sahu - Market Insights & Strategy

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Oman - Pressure to Reform

18 March 2019

In the context of recent concerns about Oman’s economic and fiscal situation, please find attached our latest analysis of the Sultanate along with an overview of the sovereign’s economy, debt burden, and its plans for reform. Overall, we believe the bearish sentiment on the Oman story is somewhat overdone and feel that comparisons to the Bahrain ‘crisis’ last year are wide of the mark.

Chavan Bhogaita, Glenn Wepener, Simon Ballard, Rakesh  Sahu
Market Insights & Strategy


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GCC Fixed Income Establishing solid foundations for 2019

23 January 2019

The GCC fixed income market has experienced a solid start to 2019, both in terms of primary and secondary market performance. We expect this trend to continue as global macro uncertainties further highlight and enhance the relative value appeal of the GCC asset class’ strong underlying fundamentals, making an interesting and compelling case for continued capital investment flows in favour of this region and asset class.

Simon Ballard, Exec. Director & Macro Strategist
Rakesh Sahu, Analyst – Market Insights & Strategy

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2019 Risk Outlook – ‘ V for Volatility’ 

02 January 2019

Our suggestions on which potentially major geopolitical and market related risks investors should be keeping an eye on in 2019.

Glenn Wepener & Simon Ballard
Market Insights & Strategy

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interview

Macro Strategy.. pre-FED analysis

20 December 2018

Ahead of the FOMC’s December rate decision , Simon Ballard, FAB Macro Strategist spoke to CNBC about his current outlook for U.S. monetary policy and that of the broader global macroeconomic situation.
Simon Ballard
Exec. Director & Macro Strategist

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Brexit Update: Still a clear and present danger

22 November 2018

More than just the pure economic arguments, for and against Brexit, that have driven the narrative over the past two years, it is now political uncertainty that is weighing most heavily on U.K. risk asset, and currency, sentiment. We believe that the Brexit polemic is about to get even more interesting.

Simon Ballard, Exec. Director & Macro Strategist

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Macro Strategy Economic Updates

Wage growth: A clear and present danger

22 October 2018

The prospect of wage growth may figure high in a consumer happiness index, but it could also give central banks the excuse to call an end to the monetary accommodation party and increase the pace of interest rates increase. In this publication we consider the risk that escalating wage growth pressures, fueled by tightening in global labour market conditions, could prove to be a clear and present danger for the outlook for the global rates market.
Simon Ballard, Exec. Director & Macro Strategist
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Brexit: What next? We try to demystify the polemic

25 September 2018

The Brexit process, or lack thereof, in the U.K. is currently raising more questions among investors than it is answering. What we do know is that the U.K. will exit the EU on March 29th 2019, with or without a ‘deal’. If there is a ‘deal’ then a two year transition period will follow for settling all the minutiae. With the deadline for reaching a deal between Westminster and Brussels – the need to agree terms on the future trading, economic and political relationship between the two regions – becoming ever closer, investors want clarity. In this latest research paper, we attempt to offer some answers to investors’ current concerns and questions over Brexit, as well as to offer some clarity on where the Brexit story and the direction of U.K. risk sentiment may go from here.

Simon Ballard - Executive Director & Macro Strategist, Market Insights & Strategy

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Macro Strategy Economic Updates

UAE Real Estate Update: Remaining Selective as Macro Backdrop Firms

16 August 2018

Further to our analysis of the UAE real estate market entitled ‘Foundations of Optimism’ published back in April, we have recently reviewed 1H 2018 data. While the direction of travel for residential and commercial property (sales and rental) prices in 2018 remains downward, data suggests that the pace of weakening is steadily slowing. Therefore, while the regional macro backdrop is improving, the sentiment toward UAE real estate seems set to remain selectively optimistic. We believe that property prices and yields may still have room to weaken further with supply the greatest threat to sector performance, but the latest data does suggest that the pace of decline is slowing.
Simon Ballard, Exec. Director & Macro Strategist
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Macro Strategy Economic Updates

Exploring the correlation between oil and inflation

06 August 2018

The direction of the oil price tends to be correlated to underlying macroeconomic conditions. Indeed, U.S. inflation data and the oil price over the past 13 years have shown visible positive correlation. However, this positive correlation has weakened and turned negative over the past couple of months, a potential warning sign of either of a near-term reversal in economic growth optimism or renewed upside in the oil price. In this analysis, we consider both scenarios and the ramifications they carry for MENA/GCC markets.
Simon Ballard, Exec. Director & Macro Strategist
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Macro Strategy Economic Updates

Macro Strategy: Antiquated nature of U.S. 2s/10s yield curve

19 July 2018

The shape of a yield curve has traditionally been viewed as a reflection of the macro outlook for that particular economy. An upward sloping, positive yield curve, where long-end rates exceed front end yields, suggests positive economic growth, improving economic conditions and rising future inflation expectations. Conversely, a flat – or even inverted – yield curve where long-end rates offer little, if any, premium, over short-dated yields is generally seen as reflecting overly tight monetary conditions and consequently is often seen as a precursor to recessionary risk.
Simon Ballard - Macro Strategist, Market Insights & Strategy
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Oil Market Update - Push & Pull

16 July 2018

The past 12 months have seen crude maintain its bullish mood and this was underlined when Brent tested the US$80 a barrel mark in May this year. Admittedly we have seen a minor technical retracement since then, but the fundamental and geopolitical environment overall still appears supportive for prices going forward. In this report we discuss how much further potential upside is possible in the near to medium term and what factors, both bullish and bearish should one keep an eye.

Glenn Wepener - Executive Director, Market Insights & Strategy

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Macro Strategy Economic Updates

All German Risk is Not Made Equal

20 June 2018

While risk pricing across the three entities of the German sovereign, Volkswagen and Porsche CDS contracts may have all enjoyed the same direction of travel through much of last year, the relative relationship has been significantly different over the first 6 months of 2018. As a result, investors in German risk will have been rewarded for a much more discerning approach to risk/reward dynamics this year. For those that now anticipate deeper deterioration in the VW scandal or the German political outlook over the coming months, we would suggest monitoring the Porsche 5Y CDS contract and its potential to play catch up.
Simon Ballard, Exec. Director & Macro Strategist
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Bahrain: Battered But Not Broken

11 June 2018

With Bahrain’s current fiscal situation under the media spotlight recently, we conducted an analysis of the issue and conclude that the economic picture may not be as bad as it appears on the surface.

Chavan Bhogaita, Managing Director & Head of Market Insights & Strategy Glenn Wepener, Exec. Director & Geopolitical Analyst Simon Ballard, Exec. Director & Macro Strategist Rakesh Sahu, Analyst

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The GCC - Facts & Figures

06 June 2018

In this report FAB’s Market Insights & Strategy team provide a very simple overview of the Gulf Cooperation Council (GCC) from a macro and markets perspective. The report covers an economic snapshot of the region, our outlook on oil, and a summary of the GCC FX and rates market.

Glenn Wepener, Geopolitical Analyst, Market Insights & Strategy, FAB Global Markets
Simon Ballard, Macro Strategist, Market Insights & Strategy, FAB Global Markets
Mohamed Al Shamsi, Analyst, Market Insights & Strategy, FAB Global Markets
Rakesh Sahu, Analyst, Market Insights & Strategy, FAB Global Markets

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Macro Strategy Economic Updates

Eurozone PMI data offers asset allocation strategy ahead of ECB QE withdrawal

03 May 2018

European Purchasing Managers’ Index (PMI) data released Wednesday (May 2) should serve as a useful reminder as to where embedded European macroeconomic risks lie. The numbers highlight to us those geographies in the sovereign spectrum that may have enjoyed the greatest benefit of monetary repression, and as such may now be at greatest risk of price corrections over the coming months. Furthermore, data released Thursday for UAE and Saudi Arabia PMIs, would seem to highlight the relative inherent strength of GCC credit when compared alongside Europe.
Simon Ballard - Macro Strategist, Market Insights & Strategy
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UAE Real Estate ‘‘Foundations for Optimism’

19 April 2018

In our latest review of UAE real estate, “Foundations for Optimism” we find that a soft, but nonetheless cautiously optimistic tone continues to characterize the UAE property market. After the correction seen in real estate prices during 2014/2015 the market is now showing some encouraging signs of underlying price support, although with evidence of extensive incentives being used by landlords to retain incumbent tenants or entice new ones, market conditions are still far from strong.

Simon Ballard, Macro Strategist, Market Insights & Strategy

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Macro Strategy Economic Updates

Balancing Politics with Macro and Rates

14 March 2018

Our latest macro strategy missive, in which we analyse and discuss the recent political developments in the U.S. alongside the OECD’s update of its global growth projections.
Simon Ballard - Macro Strategist, Market Insights & Strategy
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ECB Preview: Does Draghi Believe in Goldilocks?

 08 March 2018

ECB president Draghi, ever the wordsmith, now needs to tread a very delicate line between conveying the idea of sustainable Eurozone growth and scaring investors with an overly optimistic and hawkish rhetoric. The market hope is now that he shows a conviction in a Goldilocks Eurozone economy that is now running neither ‘too hot’ nor ‘too cold’.

Simon Ballard - Macro Strategist, Market Insights & Strategy

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Macro Strategy Economic Updates

FOMC Preview When words do speak louder than actions

31 January 2018

This evening’s FOMC rate announcement in the U.S. will be Janet Yellen’s last as Fed Chair. She will not want to shock the market before leaving office and Fed funds futures pricing suggests minimal chance of a rate move. Far more important will be the tone of Yellen’s accompanying statement and it is this that the bond market will make any reaction to, in the context of an already higher bias to the U.S. yield curve.
Simon Ballard - Macro Strategist, Market Insights & Strategy
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Middle East & African Currency Markets Guide

22 January 2018

Our 2018 guide to the Middle East and African currency markets including FAB’s capabilities in each.

Glenn Wepener - Executive Director, Market Insights & Strategy  

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Macro Strategy Economic Updates

World Economic Forum 2018; What to Watch For

22 January 2018

The annual 4-day World Economic Forum (WEF) begins in Davos-Klosters, Switzerland tomorrow (January 23) and investors will be watching carefully for market-moving headlines. With India’s Prime Minister Modi and US President Trump expected to book-end the proceedings, and with a diverse range of debates in between, there should be plenty to interest the market. In this brief overview we highlight what we believe will be the key areas to watch.
Simon Ballard - Macro Strategist, Market Insights & Strategy
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Global Macro Thoughts

10 January 2018

Global financial markets are facing a potentially more challenging environment in 2018/2019 as central banks begin to pare back monetary and fiscal stimulus and embark on the (hopefully gradual) process of balance sheet normalization. The velocity of this normalization process will be key to how global markets react. To avoid adverse reaction across the risk asset space, central banks need to convey ‘dovish tightening strategies’. Time will tell.

Simon Ballard - Macro Strategist, Market Insights & Strategy

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