13th March 2012
BlackRock weekly market views
Global Market Analysis
Economic data provided some positive news over the week, notably, good payroll numbers in the US and the biggest Chinese trade deficit since 1989, as imports soared. The big news last week was the first sovereign default for a European Union nation. On Friday Moody's announced they regarded Greece to be in default and the International Swaps and Derivatives Association (ISDA) ruled that the credit default swaps (CDS) would trigger. This coincided with equities generally reaching a two year high.
However, the combination should not suggest the crisis is completely over and that the rally is set to continue unhindered, especially in light of announcements from various central banks. The "free" liquidity, which has buoyed equity markets over the last three months, is coming to a pause. This free money is being replaced by a more cautious attitude to expanding balance sheets and a focus on long-term inflation risk from most developed market central banks. As a result, we expect to see a greater focus on high quality companies, rather than a rising tide floating all boats.
Focus on Fixed Income
Update on the fixed income landscape covering government and corporate bonds and currency moves.
Precious Metals Update
Gold prices fell back below the US$1,700/oz level this week. Early in the week, a lower estimate on Chinese economic growth weighed on all commodities, including bullion.
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