EFTA01447900.pdf

Deutsche Bank Markets Research Global Economics Date 1 July 2014 Jim Reid Nick Burns. CIA Early Morning Reid Macro Strategy Anthciny p. CFA SUM 41 I'll be honest and say that yesterday's EMR was a bit of a daze. I had a belated party for my 40th on Saturday and spent virtually the entire Friday night awake IMarket Data with my builders trying to put a house back together that has been owned by Index Mow rare the builders for 8 months. I had 15 people there until 4am Friday night with 3 WC Crossover 242 .3 11X Europe 126 .1 of them working non-stop until the first guests arrived at 230pm. Never have I COX 125 59 11 been so stressed and tired. So all day Sunday and Monday morning were a bit COX IN- p% 10303 0 154 of a daze. Sadly I'm now back living with builders again as they finish things SOP 500 1960 404% off after the party. It was blissful for the few hours we were apart. At least Bron1016 112 !6 400% we've moved out of the kitchen where we were living and sleeping for nearly 5 Gold^ 132/ •0113% months before last week. Hopefully by the time the second half of the year 10yr Treanor 252 .It ends I'll never have to see a builder again. 1TX Sen Fin 60 t2 11% Sub Fin 103 +3 CM EM 737 Anyway, the second half has now begun for markets and in our H1/02/ June 44 11X Japan CS performance review today we show that most assets have had a positive year MC Mayan as a so far. So much so that if the year eventually goes to penalties it will end up IV MOM 106 mph being a very poor second half showing in line with many of England's in recent I wo Not 09 15 o wn years!! We briefly review the numbers at the end but all the data and charts are Iwo COP 103 WI in the pdf of this document. Its pretty rare to have almost all main global assets Iwo 880 13394 Cl in positive territory this far into a year. Central bank liquidity continues to drive Won° eknOilt 115 unott markets in our opinion which has helped this synchronised uplift in valuations. Stwerc Cap 139 um, slotting HEM lit unto However we can't help sensing that there's less joy over these returns than N41011, 10565 000% might be expected. Investors are worried about valuations in numerous assets WY Index^ 7902 -027% and worried that the Fed might become more hawkish soon. There's little EFVUSI)" 1309 .031% chance of the ECB following suit anytime soon though and European W Slav 030 342 403% Government bonds have had a very good 2014 so far. 1111)71 153:2 41 17% Hwy Sang 23191 0% Over the last month we've again highlighted how many European Government ".ex 11.57 431 bond markets have hit multi-century, all time yield lows. Well yesterday it was rnew•4105 Gnome nonpants days 05 30 CLOP OS I 0 OAIT Levels JOUndo, terra Steam ant US =Oar Wow the turn of the Dutch 10 year yield to go through it's all time low again. The re 'Staffthe nit sada Dutch series is where we have our longest history of any government bond market with data going back to 1517 spanning almost half a millennia. The Upcoming Events graph is in the pdf today and further shows just how unique the current situation is. The level of uncertainty about how this all ends must by definition Ashes 06 Pen be very high given this. ISM enawlmlielog amyl 550 t64 456 So as we start H2. Asian markets are trading with a stronger tone this morning ConstinctiPspn,460 IIAeH .05% .0." .05% helped by a solid start to the global manufacturing PMIs. The official Chinese manufacturing PMI printed at 51.0. in line with consensus and at a six month UM mob veldele %Wee high. The final HSBC Chinese manufacturing PMI came in at 50.7, slightly ..Mne/ 164M 16.714 16.314 below the flash reading of 50.8, but this is also the highest print of the year. The PMIs for other Asian bellwethers including Indonesia and Taiwan were Topical DB Publications also up on a month-to-month basis. The Nikkei (+1.2%) is the clear Wotl Culbo1 7MMn Wore the atom n June 2014 rx Cop This gaols nest imponerd quentuca b coloanaMn. outperformer today, on decent volumes and despite a drop in the Japanese Q2 24 June 2014 tankan manufacturing index to 12 from 17 previously and 15 expected. The European Stoning Lew Won d %eon% 26 ASP 2014 European Ego, Soapy • the won el Pe 030 Sea. 20 kw capex component of the Tankan survey was above expectations however 7014 I cows Luropo• Dotal Mem ou. 20 Jun 2014 (+7.4% vs 6.0%) expected, which is strongest rate of growth since 2007. This has helped USDJPY (+0.1%) today. Outside of Japan, activity has been subdued with Hong Kong markets shut for July 1st holidays. The Indonesian Deutsche Bank AG/London DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0102686 CONFIDENTIAL SDNY_GM_00248870 EFTA01447900