20 Feb 2015
Global outlook: High dispersion, and occasional spikes bodes well for quantitative trading – DB
FXStreet (Barcelona) - The Deutsche Bank Research Team mentions that their global baseline scenario for 2015 for high dispersion (Greek negotiations, fragile growth in EM, easing in Europe & Japan and Fed hikes) and occasional spikes bodes well for quantitative trading.
Key Quotes
“We expect regional dispersion to persist as market drivers differ across the board. Strategists in all our main asset classes - equities, rates, emerging markets and currencies - have noted how "bottom-up" stories are likely to generate sector, country and regional differentiation in their respective markets.”
“Austerity negotiations in Greece, fragile growth in EM, quantitative easing in Europe and Japan, and the start of Fed rate hikes are all potential sources of performance divergence between assets across the globe.”
“But while regional themes abound, none is seen as strong enough to disrupt the benign global backdrop.”
“The strengthening US economy plays a big role in keeping vols contained, and we don’t expect major tail risks from Europe.”
“The incoming noise will most likely be felt through short spikes of volatility as opposed to prolonged periods of higher vol. It is only in currency markets where we see volatility being somewhat high, owing to the effect of diverging monetary policies on FX.”
“This baseline scenario for 2015 - high dispersion, contained vols and occasional spikes - bodes well for quantitative trading.”
Key Quotes
“We expect regional dispersion to persist as market drivers differ across the board. Strategists in all our main asset classes - equities, rates, emerging markets and currencies - have noted how "bottom-up" stories are likely to generate sector, country and regional differentiation in their respective markets.”
“Austerity negotiations in Greece, fragile growth in EM, quantitative easing in Europe and Japan, and the start of Fed rate hikes are all potential sources of performance divergence between assets across the globe.”
“But while regional themes abound, none is seen as strong enough to disrupt the benign global backdrop.”
“The strengthening US economy plays a big role in keeping vols contained, and we don’t expect major tail risks from Europe.”
“The incoming noise will most likely be felt through short spikes of volatility as opposed to prolonged periods of higher vol. It is only in currency markets where we see volatility being somewhat high, owing to the effect of diverging monetary policies on FX.”
“This baseline scenario for 2015 - high dispersion, contained vols and occasional spikes - bodes well for quantitative trading.”