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Quarterly Review – September 2016

The big news from the September quarter was the change in the market’s view of how Central Banks are assessing monetary policy. The Central banks have subtly implied that they do not think further easing works. If quantitative easing and negative interest rates are not boosting economies, then why do more? If there only effect is to cause distortions in financial markets and have no real economic impact, maybe you should start normalising?

The Federal Reserve is expected to lift rates in the US by 0.25% in December. They are likely to do this to save face more than anything else. We do not see any need for rapid interest rate increases any time soon. However, if there is no more stimulus from the Fed, and with Japan and Europe’s Central Banks looking tired, then negative rates make less sense. This is why longer term bond yields have started to increase.

For further insight on Intralink’s Investment Outlook and Views, we have produced a short video from our Investment Chairman Fred Strauss & Director Paul Sharkey.

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