MARKET INSIGHTS. Guide to the Markets. Europe 1Q 2016 As of 31 December 2015

(1)

Guide to the Markets

Europe |

|

MARKET INSIGHTS

(2)

Global Market Insights Strategy Team

For China, Australia, Vietnam and Canada distribution: Please note this communication is for intended recipients only. In Australia for wholesale clients’ use only and

Americas

Europe

Asia

Dr. David P. Kelly, CFA

New York

Stephanie H. Flanders

London

Tai Hui

Hong Kong

Andrew D. Goldberg

New York

Manuel Arroyo Ozores, CFA

Madrid

Yoshinori Shigemi

Tokyo

Anastasia V. Amoroso, CFA

Houston

Tilmann Galler, CFA

Frankfurt

Marcella Chow

Hong Kong

Julio C. Callegari

São Paulo

Lucia Gutierrez-Mellado

Madrid

Kerry Craig, CFA

Melbourne

James C. Liu, CFA

New York

Vincent Juvyns

Luxembourg

Dr. Jasslyn Yeo, CFA

Singapore

Samantha M. Azzarello

New York

Dr. David Stubbs

London

Ian Hui

Hong Kong

David M. Lebovitz

New York

Maria Paola Toschi

Milan

Akira Kunikyo

Tokyo

Gabriela D. Santos

New York

Michael J. Bell, CFA

London

Ben Luk

Hong Kong

Hannah J. Anderson

New York

Alexander W. Dryden

London

Anthony Tsoi, CFA

Hong Kong

Abigail B. Dwyer, CFA

New York

Nandini L. Ramakrishnan

London

Ainsley E. Woolridge

New York

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Page reference



Europe economy

4. Europe: GDP and inflation

5. Eurozone cyclical indicators

6. Eurozone recovery monitor

7. Eurozone credit conditions

8. European Central Bank (ECB) policies

9. European investment and reform potential

10. UK economic indicators

 Global economy

11. World economic data

12. Global Purchasing Managers’ Index (PMI) for manufacturing

13. Global inflation dynamics

14. Global economic divergences

15. Central bank policy

16. Developed world consumption

17. Global supply dynamics

18. Global currency trends

19. US Federal Reserve outlook

20. US: GDP and inflation

21. US employment

22. US economic indicators

23. US consumer finances

24. Japan: GDP and inflation

25. Japan: Abenomics and the economy

26. China: GDP, inflation and policy rate

27. China economic indicators

28. China financial dynamics

29. Emerging markets trade connections with developed markets

30. Emerging market challenges

31. Emerging market financial dynamics

 Equities

32. World stock market returns

33. European sector returns

34. MSCI Europe Index at inflection points

35. MSCI Europe Index equity valuations

36. MSCI Europe earnings and profit margins

37. European small capitalisation equities

38. US S&P 500 at inflection points

39. US S&P 500 equity valuations

40. US S&P 500 earnings and profit margins

41. Bear markets

42. Interest rates and equities

43. Japanese equities

44. Chinese equities

45. Developed market equity valuations by country

46. Emerging market equity valuations by country

47. Emerging markets: Valuations and returns

48. Emerging market equities

49. Equity income

50. Annual returns and intra-year declines

 Fixed income

51. Fixed income sector returns

52. Fixed income interest rate risk

53. Liquidity risks

54. Government bonds

55. US investment-grade bonds

56. Global investment-grade market

57. US high yield bonds

58. European high yield bonds

59. Emerging market debt

 Other assets and investor behaviour

60. Asset class returns

61. Correlation of returns (EUR)

62. Asset volatility and dispersion in returns

63. Risk-adjusted returns and downside protection

64. Commodities

65. Oil consumption and production

66. Life expectancy and pension shortfall

67. Cash investments

68. Industry fund flows

69. US asset returns by holding period

70. Risk/return characteristics of alternatives

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GTM – Europe

'00

'02

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'10

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'14

-1

0

1

2

3

4

5 '00

'02

'04

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'08

'10

'12

'14

-3,0

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

Europe: GDP and inflation

Real GDP

Inflation

EU28, change quarter on quarter

EU28, change year on year

Source: (Both charts) Eurostat, FactSet, J.P. Morgan Asset Management. *CPI is the Consumer Price Index. Core CPI is defined as CPI excluding energy and unprocessed food. Guide to the Markets - Europe. Data as of 31 December 2015.

4 Average

since 1999

3Q15

Real GDP

0,4%

Average

%

Eu

rop

e e

con

om

y

Average

since 1999

Nov

2015

Headline CPI*

2,2%

0,1%

Core CPI

1,8%

0,9%

(5)

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GTM – Europe

'95

'97

'99

'01

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'07

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'11

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'15

-6

-4

-2

0

2

4

6 -6

-3

0

3

6

9

12

15 -1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

-1,5

-0,8

0,0

0,8

1,5

'10

'11

'12

'14

'15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 0,6 0,8 1,0 1,2

Eurozone cyclical indicators

Source: (Top and bottom left, top right) ECB, Eurostat, FactSet, J.P. Morgan Asset Management. (Bottom right) Bloomberg, Eurostat, Markit,

J.P. Morgan Asset Management. *M1 is defined as the sum of currency held by the public and transaction deposits at depository institutions. **Purchasing managers’ indices and national measures of economic sentiment, standard deviations from mean. Core is Germany and France. Periphery is Italy and Spain.

Guide to the Markets - Europe. Data as of 31 December 2015.

New auto registrations

EU19, millions of new passenger cars, seasonally adjusted

Retail sales growth

EU19, excluding motor vehicles, change year on year

GDP growth and money supply

EU19, change year on year

Eurozone core vs. periphery

5 '02

'04

'06

'08

'10

'12

'14

-6

-4

-2

0

2

4 %

Average: 0,89

Nov 2015:

0,83

Oct 2015:

2,4%

Eu

rop

e e

con

om

y

%

GDP (y/y)

**M1* advanced by 12 months**

(y/y)

Business surveys (rhs)**

GDP growth q/q (lhs)

Core driving

eurozone

growth

Periphery driving

eurozone growth

%

(6)

GTM – Europe

|

Eurozone recovery monitor

Eurozone unemployment and consumer confidence

Consumer confidence in the periphery

Eurozone domestic demand and GDP

Change year on year

Source: (All charts) Eurostat, FactSet J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 31 December 2015.

'12

'13

'14

'15

-2

-1

0

1

2

3 Domestic demand

Eurozone GDP

%

'00

'02

'04

'06

'08

'10

'12

'14

75

90

105

120

135 -60

-50

-40

-30

-20

-10

0

10 Spain consumer confidence

Italy consumer confidence

'00

'02

'04

'06

'08

'10

'12

'14

6

7

8

9

10

11

12

13 -40

-35

-30

-25

-20

-15

-10

-5

0

5

6 %

Eurozone consumer

confidence

Eurozone unemployment rate

Eu

rop

e e

con

om

y

12-month change: Domestic demand (3Q15) +1.7% Net exports (3Q15) -0.8%

(7)

GTM – Europe

|

-8

-6

-4

-2

0

2

4

6 -200

-150

-100

-50

0

50

100

150 '05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

2

3

4

5

6

7 '05

'07

'09

'11

'13

'15

-30

-20

-10

0

10

20

30 '09

'10

'11

'12

'13

'14

'15

Eurozone credit conditions

Credit demand and eurozone GDP growth

Net % of banks reporting positive loan demand, GDP growth

Bank loans to households and non-financial corporations

€ billions, net lending flow, three-month moving average

Corporate lending rates to smaller companies

Non-financial corporations, new business lending up to €1 million, 1-5 years

Source: (Left) ECB, Eurostat, FactSet, J.P. Morgan Asset Management. (Top and bottom right) ECB, Thomson Reuters Datastream, J.P. Morgan Asset Management.

7 Eu

rop

e e

con

om

y

Italy

Spain

%

€

Stronger loan

demand

Consumer credit (lhs)

Eurozone GDP growth

y/y (rhs)

Housing loans (lhs)

Overall corporate (lhs)

Weaker loan

demand

%

_%

Germany

France

(8)

GTM – Europe

|

0

1

2

3

4 '06

'07

'08

'09

'10

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'13

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'17

0

10

20

30

40

50 '11

'12

'13

'14

'15

'16

90

95

100

105

110 1,0

1,1

1,2

1,3

1,4

1,5

1,6

European Central Bank (ECB) policies

ECB balance sheet: Assets

€ trillions

The trade-weighted euro and EUR/USD

Nominal broad effective exchange rate, price of euro in dollars

Source: (Left) ECB, FactSet, J.P. Morgan Asset Management. (Top right) BIS, FactSet, J.P. Morgan Asset Management. (Bottom right) Bloomberg, BofA/Merrill Lynch, J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 31 December 2015.

8 Jan 2005 –

Jul 2012:

249%

Aug 2012 –

Sep 2014:

-35%

€

EUR/USD

Trade-

weighted euro

Balance sheet expansion

since Nov 2014 +35%

Balance sheet expansion still

to come up to March 2017 +33%

$

Eu

rop

e e

con

om

y

Euro area government bonds with a negative yield

BofA/ML euro area bond index

Euro area bonds

with <1% yields Dec 2015

Value €3,2tn

% of total outstanding 66%

31 Dec 2015:

24%

%

(9)

GTM – Europe

|

0

2

4

6

8

10

12

10

11

12

13

14

15

16

17 '99

'01

'03

'05

'07

'09

'11

'13

'15

0

20

40

60 European investment and reform potential

Potential GDP boost by 2025 from implementing reforms

Gross fixed capital formation

% of GDP

Difficulty of doing business

2015, lower score indicates an easier business environment

Source: (Left) OECD, J.P. Morgan Asset Management. (Top right) BEA, Eurostat, FactSet, J.P. Morgan Asset Management. (Bottom right) World Bank,

J.P. Morgan Asset Management. *The size of each bar shows the effect on GDP of each policy simulated in isolation. The reform of retirement policies assumes that the ratio of working-life to life-expectancy converges towards that of Switzerland. Labour market reforms are assumed to gradually reduce the structural unemployment rate to 5% in all countries where it would otherwise be above this level. Product market reforms move each country’s regulation gradually towards best practice.

US

Eurozone

%

Eu

rop

e e

con

om

y

%

Labour market reform

Product market reform

Retirement policy reform

(10)

GTM – Europe

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-6

-3

0

3 '05

'07

'09

'11

'13

'15

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

-4

-2

0

2

4

6 '06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

5

6

7

8

9 -50

-40

-30

-20

-10

0

10 Unemployment rate and consumer confidence

Real GDP growth comparison

Wage growth

Current account

UK economic indicators

% of GDP

Change year on year

Rebased to 100 at 1Q08

US

UK

Germany

France

Japan

Source: (Top left) OECD, J.P. Morgan Asset Management. (Bottom left) FactSet, ONS, J.P. Morgan Asset Management. (Top right) FactSet, GFK, ONS, J.P. Morgan Asset Management. (Bottom right) FactSet, ONS, J.P. Morgan Asset Management. *Nominal wages include bonuses. Guide to the Markets - Europe. Data as of 31 December 2015.

Headline CPI

Real wage growth

Nominal wage growth*

Current account balance

Trade balance

Investment income

Consumer confidence

Unemployment rate

%

10 Eu

rop

e e

con

om

y

'09

'10

'11

'12

'13

'14

'15

92

96

100

104

108

(11)

Selected

countries

Gross domestic

product (GDP)

Real GDP

%

Inflation

%

Policy rate

%

Unemployment

%

€ per

capita

€ billions

2015*

2016*

2015*

2016*

Switzerland

75.605

611 0,9

1,2

-1,1

-0,3

-0,75

3,4

US

50.235

16.078 2,5

2,5

0,1

1,8

0,25 to 0,50

5,0

Sweden

47.311

453 3,2

2,8

0,0

1,2

-0,35

6,2

UK

40.486

2.556 2,4

2,3

0,1

1,3

0,50

5,2

Netherlands

40.167

673 1,9

1,8

0,3

1,1

0,05

7,2

Finland

37.799

205 0,1

0,8

-0,1

1,0

0,05

8,2

Germany

36.201

2.995 1,5

1,8

0,2

1,2

0,05

6,3

France

33.582

2.159 1,1

1,4

0,1

0,9

0,05

10,2

Japan

28.995

3.687 0,6

1,1

0,8

0,10

3,3

Eurozone

27.694

10.880 1,5

1,7

0,1

1,0

-0,30

10,7

Italy

26.508

1.617 0,7

1,3

0,1

0,8

0,05

11,7

Spain

22.755

1.068 3,1

2,7

-0,6

0,8

0,05

21,2

Greece

15.902

177 -0,7

-1,1

-1,2

0,3

0,05

24,0

Brazil

8.492

1.701 -3,5

-2,5

9,0

7,0

14,25

7,5

Russia

8.332

1.190 -3,8

-0,5

15,5

8,0

11,00

5,3

China

6.942

9.618 6,9

6,5

1,5

1,7

4,35

4,1

India

1.465

1.835 7,4

7,4

6,2

5,0

6,75

8,6

World economic data

Source: Bloomberg, FactSet, various national statistical agencies, J.P. Morgan Asset Management. Table ordered by GDP per capita. Nominal GDP figure is latest

11 GTM – Europe

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Gl

ob

al

e

con

om

y

(12)

52,9 53,1 52,4 51,9 52,2 52,6 52,4 52,5 52,2 52,2 51,8 51,5 51,7 51,9 51,7 51,0 51,3 51,0 51,1 50,7 50,7 51,3 51,2 50,9 54,4 55,2 54,2 53,4 53,5 54,0 53,2 53,8 53,4 53,2 52,6 52,3 52,3 52,6 53,0 52,1 52,4 52,2 52,5 52,4 52,2 52,9 52,6 52,1 50,9 50,2 49,8 49,8 50,4 50,8 51,4 50,9 50,7 50,8 50,9 50,6 50,9 51,1 50,1 49,6 49,7 49,5 49,0 48,6 48,5 49,0 49,2 49,3 54,0 53,2 53,0 53,4 52,2 51,8 51,8 50,7 50,3 50,6 50,1 50,6 51,0 51,0 52,2 52,0 52,2 52,5 52,4 52,3 52,0 52,3 52,8 53,1 49,3 49,7 52,1 51,2 49,6 48,2 47,8 46,9 48,8 48,5 48,4 47,5 49,2 47,6 48,8 48,0 49,4 50,7 49,6 48,3 50,6 50,6 50,6 51,4 56,5 54,8 53,7 54,1 52,3 52,0 52,4 51,4 49,9 51,4 49,5 51,2 50,9 51,1 52,8 52,1 51,1 51,9 51,8 53,3 52,3 52,1 52,9 53,0 53,1 52,3 52,4 54,0 53,2 52,6 51,9 49,8 50,7 49,0 49,0 48,4 49,9 51,9 53,3 53,8 54,8 54,1 55,3 53,8 52,7 54,1 54,9 55,6 52,2 52,5 52,8 52,7 52,9 54,6 53,9 52,8 52,6 52,6 54,7 53,8 54,7 54,2 54,3 54,2 55,8 54,5 53,6 53,2 51,7 51,3 53,1 53,0 52,8 52,9 55,5 56,1 55,0 55,3 55,4 57,3 55,7 56,6 56,2 56,9 55,1 57,5 56,8 55,8 57,1 54,6 56,7 53,6 53,8 53,6 53,3 54,2 56,5 56,0 54,8 57,2 56,5 56,9 54,9 53,2 51,7 53,3 53,3 52,8 52,9 53,9 53,8 51,7 51,8 51,5 52,0 51,7 51,6 55,5 52,5 51,9 53,7 57,1 55,5 55,4 56,4 57,3 55,8 57,9 57,5 55,9 54,8 53,9 53,9 55,1 55,7 54,1 54,0 53,6 53,8 53,0 53,1 54,1 52,8 51,2 56,6 55,5 53,9 49,4 49,9 51,5 50,5 52,2 51,7 52,4 52,0 52,0 52,2 51,6 50,3 49,9 50,9 50,1 51,2 51,7 51,0 52,4 52,6 52,6 50,8 50,4 50,6 49,3 48,8 48,7 49,1 50,2 49,3 49,1 48,7 50,2 50,7 49,6 46,2 46,0 45,9 46,5 47,2 45,8 47,0 44,1 43,8 45,6 48,0 48,5 48,3 48,5 48,9 49,1 51,0 51,0 50,4 50,3 51,7 48,9 47,6 49,7 48,1 48,9 47,6 48,7 48,3 47,9 49,1 50,2 50,1 48,7 51,4 52,5 51,3 51,3 51,4 51,5 53,0 52,4 51,0 51,6 53,3 54,5 52,9 51,2 52,1 51,3 52,6 51,3 52,7 52,3 51,2 50,7 50,3 49,1 49,5 48,5 48,0 48,1 49,4 50,7 51,7 50,2 50,2 50,4 50,0 49,6 49,7 50,7 49,6 48,9 49,2 49,4 47,8 47,3 47,2 48,3 48,6 48,2 50,9 49,8 50,4 50,2 49,5 48,4 49,3 50,3 48,8 48,7 49,0 49,9 51,1 51,1 49,2 48,8 47,8 46,1 47,6 47,9 49,2 49,1 49,1 50,7 55,5 54,7 52,7 52,3 52,4 54,0 55,8 56,1 53,3 52,0 51,4 50,0 51,7 52,1 51,0 49,2 49,3 46,3 47,1 46,1 46,9 47,8 49,5 51,7

Jan

F

eb

M

ar

Ju

n

Se

p

Ju

n

O

ct

Se

p

Ap

r

M

ay

Ju

l

Au

g

No

v

D

ec

Jan

F

eb

Ap

r

M

ar

M

ay

Ju

l

Au

g

O

ct

No

v

D

ec

Global Purchasing Managers’ Index (PMI) for manufacturing

Source: FactSet, Markit, J.P. Morgan Asset Management. The Global Purchasing Managers’ Index (PMI) assesses the economic health of the manufacturing sector

GTM – Europe

|

12 Lowest relative to 50 PMI

50 Highest relative to 50 PMI

Gl

ob

al

e

con

om

y

Korea

Japan

Ireland

Eurozone

France

Germany

Italy

Spain

UK

US

Brazil

Russia

India

China

Taiwan

Global

E

u

ro

z

o

n

e

D

ev

el

o

p

ed

Em

e

rg

in

g

Developed

Emerging

2015

2014

(13)

GTM – Europe

|

-6

-3

0

3

6

9 '91

'93

'95

'97

'99

'01

'03

'05

'07

'09

'11

'13

'15

1,5

2,0

2,5

3,0

3,5

4,0

-1

0

1

2

3

4

5 '90

'92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

'14

Global inflation dynamics

Developed economy inflation

Long-term inflation expectations

CPI* change year on year

5-year/5-year inflation**

Developed economy goods and services inflation

Source: (Top) J.P. Morgan Economic Research, J.P. Morgan Asset Management. (Bottom left and right) Bloomberg, J.P. Morgan Asset Management. *CPI is the Consumer Price Index. **5-year/5-year inflation expectations is the market expectation for average inflation over 5 years beginning in 5 years’ time, derived from inflation swaps. Guide to the Markets - Europe. Data as of 31 December 2015.

13 Gl

ob

al

e

con

om

y

%

Average Jan 1990 to Dec 2008: 2,3%

Average Jan 2009 to Sep 2015: 1,5%

%

UK

Eurozone

US

Change year on year

%

Goods

Services

(14)

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GTM – Europe

'11

'12

'13

'14

'15

'16

48

50

52

54

56

58 '11

'12

'13

'14

'15

'16

48

50

52

54

56

58 Global economic divergences

Composite PMIs: EM vs. DM

Global manufacturing vs. Global services PMIs

Index level

Source: (Both charts) FactSet, Markit, J.P. Morgan Asset Management. The Global Purchasing Managers’ Index (PMI) assesses the economic health of a sector and the overall economy by surveying output and employment intentions. Guide to the Markets - Europe. Data as of 31 December 2015.

Gl

ob

al

e

con

om

y

Emerging markets

Developed markets

Manufacturing

Services

14

(15)

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GTM – Europe

0

20

40

60

80 '07

'08

'09

'10

'11

'12

'13

'14

'15

'16

Central bank policy

Market expectations for policy rate

Central bank balance sheets

Source: (Left) Bloomberg, US Federal Reserve, J.P. Morgan Asset Management. (Right) Bank of England, Bank of Japan, ECB, US Federal Reserve,

J.P. Morgan Economic Research, J.P. Morgan Asset Management. *Central bank assets as percentage of nominal GDP is forecasted from 4Q15 to 2Q16 using J.P. Morgan Global Economics Research nominal GDP forecasts and assumptions for central bank balance sheet size based on statements released by each respective central bank and its governors. Guide to the Markets - Europe. Data as of 31 December 2015.

15 Gl

ob

al

e

con

om

y

% of nominal GDP

UK

US

Japan

Eurozone

Projections*

%

US

UK

Eurozone

Japan

-0,5

0,0

0,5

1,0

1,5

2,0

%

'17

'18

'16

(16)

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GTM – Europe

-4

-2

0

2

4 '10

'11

'12

'13

'14

'15

-6

-4

-2

0

2

4

6

8

10

12

14

16 '00

'02

'04

'06

'08

'10

'12

'14

-6

-3

0

3

6 '02

'04

'06

'08

'10

'12

'14

Developed world consumption

Household credit growth

Change year on year

Real private consumption growth

Change year on year

Source: (Top left) Bloomberg, J.P. Morgan Asset Management. (Bottom left) Bloomberg, BLS, Eurostat, ONS, J.P. Morgan Asset Management. (Right) Haver Analytics, J.P. Morgan Asset Management. Guide to the Markets – UK. Data as of 31 December 2015.

Gl

ob

al

e

con

om

y

%

UK

Japan

Eurozone

%

16 Change year on year

Real wage growth

UK

Eurozone

US

%

US

Eurozone

UK

US

(17)

GTM – Europe

|

-6

-3

0

3

6 '02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

9

10

11

12

13

14

15

16 0,5

1,0

1,5

2,0

'60

'65

'70

'75

'80

'85

'90

'95

'00

'05

'10

'15

'20

Population

growth (y/y)

Age 65+

(% population)

%

0

2

4

6

8 Global supply dynamics

Labour productivity

Medium-term GDP growth projections**

Change year on year

Global population and old age share

Source: (Top) J.P. Morgan Economic Research, J.P. Morgan Asset Management. (Bottom left) IMF, J.P. Morgan Asset Management.

(Bottom right) J.P. Morgan Economic Research, United Nations, J.P. Morgan Asset Management.*Emerging markets productivity data excludes China and India due to data availability. **WEO medium-term growth projections are five-year ahead growth forecasts. Guide to the Markets - Europe. Data as of 31 December 2015.

Gl

ob

al

e

con

om

y

%

Pre-crisis average: 1,4%

Post-crisis average: 0,4%

%

17 2011

2013

2012

2014

World

Developed markets

Emerging markets

Emerging markets*

Developed markets

(18)

GTM – Europe

|

-40

-20

0

20

40

70

80

90

100

110

120

130 '73

'77

'81

'85

'89

'93

'97

'01

'05

'09

'13

Average

since 1973

Nov 2015

US dollar index

95,7

98,5

Global currency trends

US dollar index

Broad real effective exchange rate (REER)

Source: (Top) US Federal Reserve, J.P. Morgan Asset Management. (Bottom left) BIS, Bloomberg, J.P. Morgan Asset Management. (Bottom right) FactSet, US Federal Reserve, J.P. Morgan Asset Management. *EM currency measure is the J.P. Morgan Emerging Market Currency Index, which measures the currencies of 10 emerging markets against the US dollar in nominal terms. Guide to the Markets - Europe. Data as of 31 December 2015.

18 1978-1985:

+52,7%

1985-1988:

-29,5%

2002-2011:

-28,6%

1995-2002:

+34,2%

1973-1978:

-21,8%

2011-2015:

+22,4%

1985: Plaza

Accord

1987: Louvre

Accord

1988-1995:

-7,1%

Gl

ob

al

e

con

om

y

92

96

100

104

108 -6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6 Currency performance since 2011

Real effective exchange rate

US dollar performance and US rate hikes

%

1983

2004

1988

1999

1994

Months

Real trade-weighted exchange rate, rebased to 100 on the date of first rate hike

(19)

GTM – Europe

|

US Federal Reserve outlook

Federal funds rate expectations

FOMC and market expectations for the Fed funds rate

Source: Bloomberg, Federal Reserve Bank of New York, US Federal Reserve, J.P. Morgan Asset Management. *Forecasts of 17 Federal Open Market Committee (FOMC) participants, midpoints of central tendency except for Federal funds rate, which is a median estimate. Guide to the Markets - Europe. Data as of 31 December 2015.

Gl

ob

al

e

con

om

y

19 Federal funds rate

FOMC long-run projection

Market expectations on 31 Dec 2015

%

_{US Fed FOMC forecasts median}

US Fed FOMC forecasts range

FOMC December 2015 forecasts*

2015 2016 2017 2018

Long

run

Change in real GDP, 4Q to 4Q 2,1%

2,4

2,2

2,0

Unemployment rate, 4Q

5,0%

4,7

4,9

PCE inflation, 4Q to 4Q

0,4%

1,6

1,9

2,0

3,5%

1.4%

2.4%

3.3%

0

1

2

3

4

5

6

7 '99

'03

'07

'11

'15

'19

(20)

|

GTM – Europe

'65

'70

'75

'80

'85

'90

'95

'00

'05

'10

'15

-3

0

3

6

9

12

15 '00

'02

'04

'06

'08

'10

'12

'14

-10

-8

-6

-4

-2

0

2

4

6

8

10 US: GDP and inflation

Real GDP

Inflation

Change quarter on quarter, SAAR

Change year on year

Source: (Left) BEA, FactSet, J.P. Morgan Asset Management. (Right) BLS, FactSet, J.P. Morgan Asset Management. SAAR is seasonally adjusted annual rate. *CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. Guide to the Markets - Europe. Data as of 31 December 2015.

20 Average

since 1999

3Q15

Real GDP

2,0%

%

Average

Components of nominal GDP 3Q15

Consumption

68,4%

Government

17,7%

Investment ex-housing

13,4%

Housing

3,4%

Net exports

-2,9%

Average

since

1964

Average

since

1999

Nov

2015

Headline CPI*

4,1%

2,2%

0,4%

Core CPI

4,1%

2,0%

%

Gl

ob

al

e

con

om

y

(21)

GTM – Europe

|

'02 '04 '06 '08 '10 '12 '14 '16 1.200 1.600 2.000 2.400 2.800 3.200 0 4 8 12 16 20

'70

'80

'90

'00

'10

0

4

8

12 US employment

Unemployment rate and wage growth

Seasonally adjusted, wages of production and non-supervisory workers change year on year

Income expectations

% of respondents expecting household income to rise in the next year

Source: (Top) BEA, FactSet, J.P. Morgan Asset Management. (Bottom left) BLS, FactSet, National Federation of Independent Businesses,

J.P. Morgan Asset Management. (Bottom right) FactSet, University of Michigan, J.P. Morgan Asset Management. *Three-month moving average. **Job quits are the number of people deciding to leave their current job. Guide to the Markets - Europe. Data as of 31 December 2015.

Unemployment

50-yr average: 4,3%

50-yr average: 6,1%

Nov 2015:

5,0%

Nov 2015: 2,0%

Wage growth

%

Gl

ob

al

e

con

om

y

21 US employment quits vs. planning to raise wages

Private industry

total job quits**

NFIB small business net %

planning to raise wages*

%

'01

'02

'03

'04

'05

'06 '07

'08

'09

'10

'11

'12 '13

'14

'15

45

50

55

60

65

70 Nov 2015:

55,6%

(22)

|

GTM – Europe

'70 '80 '90 '00 '10 0 40 80 120 160 100 200 300 400 500 600 700

'60

'70

'80

'90

'00

'10

0

1.000

2.000

3.000 US economic indicators

Source: (Top left) BEA, FactSet, J.P. Morgan Asset Management. (Bottom left) US Census Bureau, J.P. Morgan Asset Management. (Top right) BLS, FactSet, The Conference Board, J.P. Morgan Asset Management. (Bottom right) FactSet, J.P. Morgan Asset Management. Shaded areas highlight US recessionary periods.

Durable goods and fixed investment

% of GDP

Initial jobless claims vs. consumer confidence

Jobless claims in thousands

Housing starts

Thousands, SAAR

Federal funds effective rate

22 Gl

ob

al

e

con

om

y

Consumer confidence

Jobless claims

%

'60 '70 '80 '90 '00 '10 20 22 24 26 28 30

%

'80 '90 '00 '10 0 5 10 15 20 25

Recession

(23)

|

GTM – Europe

'80

'85

'90

'95

'00

'05

'10

'15

8

9

10

11

12

13

14

0

10

20

30

40

50

60

70

80

90

100 US consumer finances

Consumer balance sheet

3Q15, $ trillions outstanding, not seasonally adjusted

Household net worth

$ billions, SAAR

Household debt service ratio

Debt payments as % of disposable personal income, seasonally adjusted

Source: (All charts) FactSet, US Federal Reserve, J.P. Morgan Asset Management. *4Q15 numbers for US household net worth and debt service ratio are

J.P. Morgan Asset Management forecasts. **Revolving includes credit cards. ***Taken from the Monthly Interest Rate Survey for 15-year and 30-year fixed mortgages.

23 %

4Q07: 13,2%

**4Q15*:**

10,0%

'90

'92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

'14

20.000

40.000

60.000

80.000 **4Q15*:**

$87.248

2Q07:

$67.648

$

Gl

ob

al

e

con

om

y

Total assets: $99,5tn

Homes: 25%

Deposits: 9%

Pension funds: 21%

Other financial

assets: 39%

Other tangible: 6%

Mortgages: 67%

Other non-revolving: 2%

Revolving: 6%**

Auto loans: 7%

Other liabilities: 8%

Student debt: 9%

3Q07 peak: $81,8tn

1Q09 low: $69,0tn

% of total US

mortgages that

are fixed rate***

71%

Total liabilities: $14,4tn

(24)

|

GTM – Europe

-5

-4

-3

-2

-1

0

1

2

3

4 '99

'01

'03

'05

'07

'09

'11

'13

Japan: GDP and inflation

Real GDP growth

Inflation

Change quarter on quarter

Change year on year

Source: (Left) FactSet, Japan Statistics Bureau & Statistics Centre, J.P. Morgan Asset Management. (Right) Bloomberg, FactSet, Japan Ministry of Internal Affairs & Communications, J.P. Morgan Asset Management. *CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy.

24 Average

since 1999

3Q15

Real GDP

0,2%

0,3%

%

Average

since 1999

Nov

2015

Headline CPI*

0,0%

0,3%

Core CPI

-0,3%

0,9%

CPI less food &

consumption tax

-0,1%

0,1%

%

Gl

ob

al

e

con

om

y

-3

-2

-1

0

1

2

3

4

5 '99

'01

'03

'05

'07

'09

'11

'13

(25)

|

GTM – Europe

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

-8

-4

0

4

8 '92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

'14

'04

'06

'08

'10

'12

'14

-2

-1

0

1

2

3 Japan: Abenomics and the economy

Bank lending and job-to-applicant ratio

Lending growth year on year, number of jobs to applicants

Wage growth

Change year on year, three-month moving average

New job offers by company size

Six-month moving average, thousands

Source: (Top left) FactSet, Japan Ministry of Internal Affairs & Communications, Japan Ministry of Health, Labour and Welfare, J.P. Morgan Asset Management. (Bottom left) Thomson Reuters Datastream, J.P. Morgan Asset Management. (Right) Bloomberg, J.P. Morgan Asset Management. *CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. Guide to the Markets - Europe. Data as of 31 December 2015.

25 %

Wage growth

Core CPI*

Gl

ob

al

e

con

om

y

%

Job-to-applicant

ratio

Bank lending (y/y)

x

200

400

600 '00

'02

'04

'06

'08

'10

'12

'14

Companies with 29

employees or fewer

Companies with

30 employees or

more

(26)

GTM – Europe

|

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 -10 -5 0 5 10 15

-6

-3

0

3

6

9

12

15

18

21 '90

'92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

'14

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 1 2 3 4 5 4 8 12 16 20 24

China: GDP, inflation and policy rate

Real GDP growth

Change year on year

Inflation

Change year on year

Policy rate and reserve ratio requirement (RRR)**

Policy rate on one-year renminbi deposits

Source: (Left and top right) FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Bottom right) FactSet, People’s Bank of China (PBoC), J.P. Morgan Asset Management. *CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. **PPI is the Producer Price Index. ***Average RRR for large and small banks. Guide to the Markets - Europe. Data as of 31 December 2015.

26 Gl

ob

al

e

con

om

y

Consumption

GDP growth

Investment

Net exports

%

3Q15:

6,9%

%

PBoC policy rate

RRR

Nov 2015

Headline CPI*

1,5%

Core CPI

1,5%

Headline PPI -5,9%**

(27)

|

GTM – Europe

-1

0

1

2 '11

'12

'13

'14

'15

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

-60

-30

0

30

60

90 Imports

Exports

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

40

45

50

55 '05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

0

10

20

30

0

10

20

30

40

50

60

70 China economic indicators

Source: (Top and bottom left, top right) FactSet, National Bureau of Statistics of China, J.P Morgan Asset Management. (Bottom right) Soufun, J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 31 December 2015.

China industrial production, retail and auto sales

Manufacturing and services components of GDP

12-month moving average, % of nominal GDP

External account

Top 100 cities property prices

Change month on month

27 %

Gl

ob

al

e

con

om

y

Services

Manufacturing

%

_%

Change month on month, three-month moving average

Auto sales (rhs)

Retail sales (lhs)

Industrial production (lhs)

(28)

|

GTM – Europe

'79

'84

'89

'94

'99

'04

'09

'14

40

80

120

160 '02

'04

'06

'08

'10

'12

'14

0

1

2

3

4

5 China financial dynamics

Source: (Top left) FactSet, World Bank, J.P. Morgan Asset Management. (Bottom left) BIS, IMF World Economic Outlook October 2015, Lombard Street Research, J.P. Morgan Asset Management. (Top right) BIS, FactSet, J.P. Morgan Asset Management. (Bottom right) FactSet, People’s Bank of China,

J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 31 December 2015.

Credit to private sector

% of GDP

Chinese renminbi

Trade-weighted RMB indexed to 100 in 2010

2014 public, household and non-financial corporate debt

% of GDP

China foreign exchange reserves and external debt

Trillions USD

28

0

50

100

150

200

250

300

350 Non-financial corporate debt

Public debt

Household debt

%

$

2014: 142%

%

Gl

ob

al

e

con

om

y

'11

'12

'13

'14

'15

'16

95

100

105

110

115

120

125

130 6,0

6,1

6,2

6,3

6,4

6,5

6,6

6,7

RMB

USD/RMB

Trade-weighted RMB

External debt as a % of global GDP EM Asia 1998 US 2008 China 2014 1,7% 21,8% 1,2%

(29)

|

GTM – Europe

0

25

50

75

100

0

25

50

75

100 ₀

₅

₁₀

₁₅

₂₀

Emerging markets trade connections with developed markets

Trade linkages with China

Merchandise exports to and imports from China, % of GDP

World export volume

EM exports breakdown

Source: (Top left) Netherlands Bureau for Economic Policy Analysis World Trade Monitor, J.P. Morgan Asset Management. (Bottom left) World Bank, J.P. Morgan Asset Management. (Right) OECD, J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 31 December 2015.

Imports

Exports

M a n u fa c tu ri n g e x p o rt s Commodity exports

Change year on year, three-month moving average

Percentage of total exports, 2014

Gl

ob

al

e

con

om

y

29 '00

'02

'04

'06

'08

'10

'12

'14

'16

-20

-10

0

10

20

30 Oct 2015:

1,46%

%

_%

India

China

Korea

Colombia

Russia

Chile

Indonesia

Brazil

S. Africa

Mexico

Turkey

Mexico

Spain

Turkey

UK

Italy

India

US

France

Sweden

Switzerland

Brazil

Indonesia

Russia

Germany

South Africa

Japan

Australia

Saudi Arabia

Thailand

Chile

Malaysia

Korea

Singapore

(30)

GTM – Europe

|

1,5

2,5

3,5

4,5

5,5

6,5

7,5

8,5

9,5

0

2

4

6

8

10

12

14 '93

'95

'97

'99

'01

'03

'05

'07

'09

'11

'13

'15

55

75

95

115

135

140

150

160

170

180 '00

'02

'04

'06

'08

'10

'12

'14

Emerging market challenges

Emerging markets: GDP and capital flows

Broad private non-financial credit

Relative EM / DM equity performance and USD REER*

Equity performance rebased to 100 at 1993

Source: (Left) Institute of International Finance, IMF World Economic Outlook October 2015, J.P. Morgan Asset Management. (Top right) BIS, IMF World Economic Outlook October 2015, J.P. Morgan Asset Management. (Bottom right) FactSet, MSCI, J.P. Morgan Asset Management. *REER is real effective exchange rate.

30 '95

'00

'05

'10

'15

0

50

100

150

200

250

90

100

110

120

130 USD REER (inverted)

MSCI EM / MSCI DM

Gl

ob

al

e

con

om

y

%

$tn

EM GDP growth (y/y)

Capital flows

% of GDP

Emerging markets (rhs)

Developed markets (lhs)

_%

%

Emerging Markets

ex-China (rhs)

(31)

GTM – Europe

|

0

2

4

6

8

10

12 -3

-2

-1

0

1

2

3

4

5

6 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Commodity exporters (lhs)

20

25

30

35

5

15

25

35 '90

'94

'98

'02

'06

'10

'14

Emerging market financial dynamics

EM current account

% of GDP

EM equity performance and US rate hikes

MSCI EM Index in USD, rebased to 100 on the date of first rate hike

EM foreign exchange reserves vs. external debt

Source: (Left) Bloomberg, J.P. Morgan Asset Management. (Top right) MSCI, US Federal Reserve, J.P. Morgan Asset Management. (Bottom right) J.P. Morgan Economic Research, J.P. Morgan Asset Management. *External debt includes both private and sovereign and is displayed as a four quarter moving average.

31 Days

Gl

ob

al

e

con

om

y

%

_%

China (rhs)

Commodity importers (lhs)

External debt*

EM reserves

% of GDP

%

Apr 1994

Jun 1999

Jun 2004

Current

50

75

100

125

150 -250

-125

0

125

250

(32)

20,2% Europe 19,6% 26,7% Asia ex-Jp 38,0% -23,0% TOPIX -40,6% 73,4% MSCI EM 62,8% 35,4% Sm all Cap 24,4% 5,5% US S&P 500 2,1% 20,8% Asia ex-Jp 19,7% 27,2% Sm all Cap 35,8% 29,5% US S&P 500 13,7% 24,4% TOPIX 12,1% 12,4% TOPIX 9,8% 8,2% US S&P 500 7,3% 19,6% Asia ex-Jp 28,6% 26,1% MSCI EM 33,6% -33,7% US S&P 500 -37,0% 67,2% Asia ex-Jp 67,2% 28,3% Asia ex-Jp 15,6% 3,5% HDY Equity 1,5% 18,1% Europe 16,4% 26,7% US S&P 500 32,4% 19,7% Asia ex-Jp 7,7% 12,9% US S&P 500 1,4% 10,0% US S&P 500 7,0% 7,3% Asia ex-Jp 7,1% 18,6% MSCI EM 28,8% 4,6% Portfolio 11,1% -37,9% HDY Equity -34,4% 40,2% Sm all Cap 40,8% 27,5% MSCI EM 14,4% -5,7% Sm all Cap -8,7% 16,8% MSCI EM 17,4% 21,5% TOPIX 54,4% 16,5% Sm all Cap 6,7% 11,5% Sm all Cap 2,8% 7,2% Sm all Cap 4,9% 7,3% Sm all Cap 6,3% 16,0% HDY Equity 21,6% 3,2% Europe 6,5% -38,6% Sm all Cap -40,4% 37,6% Portfolio 35,8% 23,9% TOPIX 1,0% -5,8% Portfolio -7,5% 16,3% Sm all Cap 18,4% 20,5% Europe 22,3% 16,2% HDY Equity 8,7% 8,8% Europe 5,4% 7,1% HDY Equity 5,5% 6,3% HDY Equity 6,0% 12,5% Portfolio 19,4% -1,0% HDY Equity 4,7% -40,3% Portfolio -40,1% 34,0% HDY Equity 30,2% 23,1% US S&P 500 15,1% -7,5% Europe -8,8% 15,6% Portfolio 17,1% 15,3% Portfolio 23,6% 15,3% Portfolio 8,2% 8,3% Portfolio 1,9% 7,1% Portfolio 5,3% 6,2% Portfolio 5,9% 5,2% Sm all Cap 13,6% -4,9% US S&P 500 5,5% -43,3% Europe -38,5% 32,5% Europe 28,6% 20,9% Portfolio 11,1% -9,6% TOPIX -17,0% 14,2% US S&P 500 16,0% 13,9% HDY Equity 20,5% 11,8% MSCI EM 5,6% 6,3% HDY Equity 0,2% 6,7% Asia ex-Jp 3,4% 4,8% Europe 4,5% 3,6% US S&P 500 15,8% -8,8% Sm all Cap -3,8% -49,8% Asia ex-Jp -47,7% 22,5% US S&P 500 26,5% 16,2% HDY Equity 8,0% -14,3% Asia ex-Jp -14,6% 13,6% HDY Equity 14,0% -1,1% Asia ex-Jp 6,2% 10,1% TOPIX 10,3% 1,5% Asia ex-Jp -5,3% 5,4% Europe 5,2% 4,8% MSCI EM 6,4% -8,7% TOPIX 3,0% -14,5% TOPIX -11,1% -50,8% MSCI EM -45,7% 1,5% TOPIX 7,6% 11,7% Europe 7,5% -15,4% MSCI EM -12,5% 5,9% TOPIX 20,9% -6,5% MSCI EM 3,8% 7,4% Europe 5,2% -4,9% MSCI EM -5,4% 3,5% MSCI EM 1,6% 1,9% TOPIX 1,2%

World stock market returns

Source: FactSet, MSCI, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Annualised return covers the period 2006 to 2015. HDY Equity: MSCI AC World High Dividend Yield Index; Small Cap: MSCI Europe Small Cap Index. Hypothetical portfolio (for illustrative purposes only and should not be taken as a

GTM – Europe

|

32

€ Local

2010

2007

2006

2008

2009

2011

2012

2013

2014

2015

4Q15

10-yr

_ann.

Eq

uit

ie

s

(33)

European sector returns

Source: FactSet, MSCI, J.P Morgan Asset Management. All calculations are total return in local currency, not annualised. *“Since market peak” represents period

GTM – Europe

|

MSCI Europe Index

Europe weight

4Q15

2015

Since market peak*

Since market low*

Forward P/E ratio

15-year average

Trailing P/E ratio

15-year average

Dividend yield

15-year average

Growth weight

Value weight

Beta to Europe

Correl to int. rates**

Financials

Health

care

Cons.

staples

Cons.

disc.

Industrials Materials

Energy

Telecom

Utilities

Tech

Europe

33 Eq

uit

ie

s

22,6% 14,0% 14,7% 11,7% 11,2% 6,5% 6,2% 5,0% 3,9% 4,1% 100% 10,4% 18,7% 24,4% 16,2% 12,0% 6,3% 0,7% 3,7% 0,5% 7,2% 100% 35,4% 9,1% 4,7% 7,1% 10,3% 6,7% 11,9% 6,3% 7,5% 0,9% 100% 3,3 4,7 6,8 6,5 6,5 2,2 3,1 6,0 5,4 13,2 5,2 3,5 10,1 15,3 10,5 6,8 -11,2 -10,6 10,3 -0,9 14,9 5,4 -31,6 113,6 104,2 69,8 20,5 -17,3 -4,3 54,2 -6,6 11,4 17,9 190,9 206,5 198,6 275,6 182,6 96,1 31,4 131,7 64,5 181,8 152,9 1,33x 0,64x 0,64x 0,95x 1,13x 1,30x 1,00x 0,80x 0,86x 0,99x 1,00x β 0,24 0,15 0,14 0,20 0,21 0,20 0,19 0,20 0,17 0,19 0,22

ρ

11,2x 17,6x 20,3x 14,1x 15,6x 16,4x 14,4x 19,4x 14,5x 18,8x 15,0x 10,9x 15,8x 15,9x 14,4x 14,1x 12,5x 11,7x 17,4x 13,5x 20,6x 13,3x 11,5x 18,9x 21,8x 16,0x 16,8x 17,0x 14,1x 20,3x 14,4x 21,4x 15,9x 12,7x 17,0x 17,2x 16,9x 16,2x 14,2x 11,8x 19,4x 14,2x 36,3x 14,8x 3,9% 2,7% 2,7% 2,6% 2,9% 3,9% 6,6% 4,2% 4,9% 1,5% 3,4% 3,8% 2,7% 2,7% 2,8% 2,8% 2,9% 4,0% 4,4% 4,8% 1,8% 3,3% We ig h ts Re tu rn P /E D iv

(34)

GTM – Europe

|

600

1.000

1.400

1.800 '97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

MSCI Europe Index at inflection points

MSCI Europe Index

Source: FactSet, MSCI, Tullett Prebon, J.P. Morgan Asset Management. Local currency returns. P/E ratios are forward P/E ratios. Forward P/E ratio is a bottom-up calculation based on the most recent price data divided by the mean consensus estimates for earnings in the next 12 months and is provided by FactSet Market Aggregates. Return calculations shown in green are based on the total return index. *Represented by the German Bund yield. Guide to the Markets - Europe. Data as of 31 December 2015.

34

Characteristic Sep 2000 Jul 2007 Dec 2015

Index level 1.623 1.641 1.413 P/E ratio (fwd) 21,8x 13,0x 15,0x Dividend yield 1,8% 2,8% 3,4% Euro 10-year* 5,2% 4,6% 0,6%

16 Jul 2007:

P/E = 13,0x

1.641 12 Mar 2003:

P/E = 11,9x

676 4 Sep 2000:

P/E = 21,8x

1.623 9 Mar 2009:

P/E = 8,3x

714 -55%

+180%

-54%

Total return:

+133%

31 Dec 1996:

P/E = 16,3x

714 31 Dec 2015:

P/E = 15,0x

1.413 +144%

Eq

uit

ie

s

(35)

|

GTM – Europe

5

15

25

35

45 '80

'84

'88

'92

'96

'00

'04

'08

'12

0

2

4

6

8

10

12 '00

'02

'04

'06

'08

'10

'12

'14

MSCI Europe Index equity valuations

Earnings yield and 10-year bond yield

Forward P/E ratio

MSCI Europe cyclically adjusted P/E ratio

Adjusted using trailing 10-year average inflation-adjusted earnings

Source: (Top left) FactSet, J.P. Morgan Asset Management. (Bottom left) FactSet, MSCI, J.P. Morgan Asset Management. (Right) Bloomberg, FactSet, MSCI, Tullett Prebon, J.P. Morgan Asset Management. Forward P/E ratio is a bottom-up calculation based on the most recent price data divided by consensus estimates for earnings in the next 12 months and is provided by FactSet Market Aggregates. Earnings yield is calculated as the inverse of the forward P/E ratio. *Represented by the German Bund Yield. Guide to the Markets - Europe. Data as of 31 December 2015.