US Stocks, Emerging Markets and Central Banks!

Dear Reader,


This week US stocks suffered a one day drop by more than 1% measured by the main indices. They bounced back immediately, though.


I continue to think US stocks will go on rising. The Trump trade will fade a bit, but earnings will still grow. The US economic recovery will continue with pace of 1.2 - 2.0% GDP growth. Until there is a shallow recession. But even then, when stocks fall by more than 20%, this will be a buying opportunity. The US has become a safe heaven and it attracts a lot of capital, part of which finds its way into stocks.

Oil is stuck in 45 - 60 USD range and I do not envisage it breaking soon. Russia stocks should continue to rise, as the Russian economy is recovering. India continues to grow strongly and Indian stocks are a long term buy opportunity. The turmoil in Bazil is a buying opportunity, as far as I am concerned.

I start to think the Federal Reserve will raise the Federal Funds Rate only once more this year. I predicted this in the past, but the probability for a hike rose. Now the probability fell back again. That said, I forecast the yield on the 10 year US treasury will finish 2017 below 2.70%.

I expect the European Central Bank will go on buying assets until the end of 2018, when its Asset Purchase Program will end. I do not expect the yield on the German 10 year government bond to rise above 0.80% in 2017.



Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of Bulgarian National Bank!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!


Kind regards,
Petar Posledovich