Question

International Equity markets

6.What is stimulus as used here?

7.What is sentiment and how is it related to economics? Perception?

8.Risks: What are trade concerns? How are investment flows affected by ths? How is fx affected by investment flow changes here?

9.What is meant by risk premia?

10.Yield curve flattening: How are investment flows affected? What is the fx effect?

Answer 1

6. An economic stimulus is the use of monetary or fiscal policy changes to kickstart growth during a recession. Governments can accomplish this by using tactics such as lowering interest rates, increasing government spending and quantitative easing,

7. sentiment is a statistical measurement and economic indicator of the overall health of the economy as determined by consumer opinion. Consumer sentiment takes into account an individual's feelings toward his or her current financial health, the health of the economy in the short term and the prospects for longer-term economic growth

9. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.

10. Yield Curve flattening means the gap between short and long-term Treasury rates has narrowed.

A flattening yield curve can indicate that expectations for future inflation are falling. Investors demand higher long-term rates to make up for the lost value because inflation reduces the future value of an investment. This premium shrinks when inflation is less of a concern.

A flattening yield curve can also occur in anticipation of slower economic growth. Sometimes the curve flattens when short-term rates rise on the expectation that the Federal Reserve will raise interest rates.