Economics & Strategy – Interest Rate Strategy: Second

At No. 2 for a second consecutive year is the ten-strong Royal Bank of Scotland squad co-headed by Andrew Roberts and Harvinder Sian in London. The strategists “had simply the best and most in-depth analysis of the European sovereign crisis,” insists one New York–based fund manager. “They had a command of the inner workings of the policymakers and, importantly, how their actions would impact market price action.” The team believes that 2013 will be “yet another year of anemic growth everywhere — with the euro zone the worst performing, stuck in perma-recession,” Sian says. But there will likely be an upside, in that this might also be the year in which central banks “decide enough is enough and ease policy markedly, moving to easier targets as they switch to different forms of nominal [gross domestic product] targeting,” he adds. If that happens, the result will be “higher break-even inflation rates, steeper real curves and steeper nominal curves, on a spot and forward basis. Everywhere around the world,” Sian maintains. — Carolyn Koo