Deflationary Pressures Mounting in Europe

Pictet

Yves Bonzon, Christophe Donay

Research

16 Pages

Pictet examines the global macroeconomic backdrop, market leadership, and the evolving case for hedge funds as financial conditions normalize. It argues improving fundamentals may create broader investment opportunities, while warning that deflation risks in Europe and shifting monetary policy could reshape market leadership.

Key Takeaways

Hedge Fund Revival: Hedge fund assets surpassed USD2.5 trillion after growing by more than USD500 billion in 2013, supported by improving market conditions and expanding opportunity sets.
China Growth Stabilization: China's GDP grew 7.8% year over year in Q3 2013, reinforcing expectations that annual growth could remain near the 7.5% policy target.
Europe Deflation Risks: Eurozone inflation slowed to 0.7% in October while Spain returned to growth at 0.1% in Q3 2013, highlighting an uneven economic recovery.
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