Investors face persistently low interest rates in Europe, the US, and the UK. Central banks are engaging in a subtle currency war, talking down the value of their respective currencies anytime exchange rates approach the edges of their current range. The combination of a lack of earnings growth in the US coupled with no QE from the Fed will lead to further weakness short term in US equities. Investors are likely to focus to companies in the defensive sectors and stocks that offer attractive dividend yields.

In the US, inflation is subdued and will not rise until more of the economy’s capacity (labour, manufacturing etc.) is utilised. There is slack in the labour market because the high paying jobs that existed before the crisis have been replaced by lower paying jobs. Despite clearly reducing the unemployment rate, these lower paying jobs are not as beneficial for the economy in the long term because they pay less. This results in less discretionary spending from consumers, which in turn results in lower levels of demand inflation.

In the Eurozone, Quantitative Easing (QE) will continue to improve the macro backdrop. Given the extent of trade links between major Eurozone countries and China (China is Germany’s 3rd largest trading partner), macro developments in Asia will be important. Any signs of weakness in the underlying Eurozone economy will likely be met with the promise of further QE, and subsequent delivery of the same if required. The election of the Syriza party in Greece removes a key risk.

UK rate rises will be put off until at least 2016 for similar reasons to the US – strong sterling would weigh on the economy too much and UK inflation is currently 1% and trending lower.

In Ireland, strong economic fundamentals should see bond yields continue to trade closer to both those of Germany and France. The economy will grow 7.2% this year and 4.4% in 2016. The spurt of growth has been aided by reductions in the budget deficit to 1.5% and Government Debt-to-GDP ratio, which has fallen to 98%.