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2016 review: politics in the driver’s seat

04.01.2017

2016 was full of surprises. Politics took centre stage once concerns about China and falling oil prices receded. The plunge in crude prices and heightened risk of further CNY depreciation in January-February triggered disruptive sell-offs in credit and other asset markets. Brexit, Rousseff, Trump and Renzi then induced major financial market turnarounds, most of the time in unexpected ways.

- Broad risk-asset sell-off (equities, credit, emerging bonds) in 1Q16 on China growth concerns and commodity price meltdown.
- Fed postpones tightening till year-end. Politics (Brexit, Rousseff, Trump, Italian referendum) take centre stage, shape market trends throughout the year.
- ECB expands easing in size and scope from March. BoE resumes QE post Brexit and ventures into corporate bonds.
- Global fixed income returns in the vicinity of 3.5% in 2016 for euro-based
investors.


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