英译汉 1. 
    Bond markets appear to be telling a different story.¹ Bond prices have continued rallying, and the yield for two-year US Treasuries has fallen to 3.1% (as at 12 December). Bond markets have also priced in future interest rate cuts, which has helped their yields fall. Bonds are seen as forward indicators. Bond prices rally and yields fall when investors anticipate an economic downturn.² During recessionary periods, bonds tend to outperform as investors switch out of growth assets into safe investing instruments.
    The divergence in bond and equity markets³ could be the result of economic uncertainty. At present, US economic growth appears to be moderating, driven by a sharp slowdown in the housing sector.⁴ The problems in sub-prime mortgages, when homeowners increased mortgages on their homes at temporary low rates of interest in order to provide themselves with immediate spending money, have led to more foreclosures and caused house prices to decline. Financial institutions with direct or indirect exposure to sub-prime mortgages have started reporting huge profit losses, and their increased reluctance to lend has led to tighter credit conditions. Excessive tightening and much lower house prices could lead to reduced US domestic consumption.⁵ This has raised fears of a recession. As more banks report larger than expected losses, concern over the potential impact on the financial system and the economy has increased, deepening fears of a recession.
    However, key data such as employment⁶ has continued to hold up (supporting domestic consumption), and companies continue to report profits. This supports the hope that the US economy will not enter a period of negative economic growth, and won't fall into a recession. Key to this will be how the Fed responds to tightening credit conditions. The Fed cut interest rates in December, and has left the door open to further cuts if necessary. It has also announced measures to inject liquidity into the financial system.
    In an overall environment of soft growth, investors will likely pay a premium for markets where growth appears more certain. As growth in the US will be relatively slow, focus is likely to turn to high-growth emerging markets. Asia, except Japan, will be the likely beneficiary, as valuations still remain relatively reasonable and economic growth remains strong.
    The trend toward a weaker US dollar is likely to continue but the USD is unlikely to collapse. We expect that Asian currencies will continue to appreciate against the USD as they⁷ adjust to reflect their stronger underlying fundamentals. In the short term, the USD could continue to depreciate against the GBP and EUR, but these currencies look increasingly expensive in valuation terms.