Barclays to Markets: Don’t Fight the Fed

  Barclays to Markets: Don’t Fight the Fed

  Global Outlook report recommends a more constructive position towards risk

Business Wire

NEW YORK & LONDON -- September 25, 2012

The aggressive liquidity injections announced by the European Central Bank and
the US Federal Reserve have created a buy signal for risky assets, according
to Barclays latest flagship quarterly research publication, Global Outlook:
Don’t Fight the Fed. Although weak economic growth continues to weigh on the
markets, the report foresees modestly stronger growth in the second half of
the year, which should be sufficient to spark further gains in risky asset
prices.

“A modestly growing economy with the cyclically sensitive sectors at still
depressed levels is a relatively stable and safe, if not exciting,
environment,” said Larry Kantor, Head of Research. “When this is combined with
a central bank committed to aggressively supporting growth through higher
asset prices, it amounts to a very attractive environment for taking risk.”

Investor caution since 2008 has driven returns on so-called “risk free” assets
to collapse. As investors have moved out along the risk curve, returns on
close substitutes for safe assets have also become unattractive. As a result,
Barclays Global Outlook report advises investors to shift into lower-rated
bonds in both investment grade and high yield credit, and sees significant
potential upside in cyclically sensitive stocks, which have underperformed
recently.

Additional recommendations in Barclays Global Outlook include:

  * Build exposure to European credit, which is expected to compress somewhat
    relative to US credit
  * Favor inflation-linked bonds, which should outperform given the prospects
    for aggressive monetary easing
  * Beware of a vulnerable dollar in the short term, given the US Federal
    Reserve’s commitment to open-ended liquidity injections
  * Invest in certain emerging market stock markets, particularly in countries
    that have engaged in significant policy stimulus and where downside risks
    seem overstated

About Barclays Global Outlook

The Global Outlook research report, published quarterly, provides an
assessment of all major economies and outlines the likely implications for
global financial markets, including commodities, credit, economics, emerging
markets, equities, fixed income and foreign exchange.

Barclays moves, lends, invests and protects money for customers and clients
worldwide. With over 300 years of history and expertise in banking, we operate
in over 50 countries and employ over 140,000 people. We provide large
corporate, government and institutional clients with a full spectrum of
solutions to their strategic advisory, financing and risk management needs.
Our clients also benefit from access to the breadth of expertise across
Barclays. We’re one of the largest financial services providers in the world,
and are also engaged in retail banking, credit cards, corporate banking, and
wealth and investment management. Barclays offers premier investment banking
products and services to its clients through Barclays Bank PLC.
For more information, visit www.barclays.com

Contact:

Barclays
Mark Lane, +1-212-412-1413
mark.lane@barclays.com