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As Recovery Trade Winds Down, Barclays Capital Expects Policy Tightening Concerns to Disrupt Markets in 2010

Latest “Global Outlook” research forecast calls for above-consensus growth in early 2010, cautions on market concern over policy stimulus withdrawal

NEW YORK (December 10, 2009) - Barclays Capital, the investment banking division of Barclays Bank PLC, today said in its latest flagship quarterly research publication, Global Outlook: Beyond the Recovery Trade, that while unusually low policy rates and definitive signs of economic growth in developed countries should sustain markets in the short-term, above-consensus US economic growth in Q1 2010 could trigger concerns over policy tightening. Barclays Capital is thus recommending investors keep recovery trades in place for now, but to be especially alert for signs of change in the current liquidity-driven environment.

“While global economic growth will continue in 2010, the uniformly favorable environment for asset prices is likely to change in the first half of the year,” said Larry Kantor, Head of Research at Barclays Capital. “The pervasive impact of cyclical swings on markets is likely to give way to issues such as the exit strategies to be taken by central banks and regulatory responses to the financial crisis. Signs that policy tightening is imminent would suggest that investors should reduce risk and diversify their positions.”

Major themes of Barclays Capital’s Global Outlook include:

• Recovery trade in its final phase: when US unemployment starts falling, the course of Fed policy is back on the table
• Money market rates, the US dollar and gold are most sensitive to monetary tightening
• Valuations in equity and credit are no longer compelling, but policy tightening is unlikely to signal a bear market
• Despite declines in risk premiums, emerging markets remain attractive as medium-term investments

Contact:

Seth Martin
+1 (212) 412-7565
seth.martin@barclayscapital.com

About The Barclays Capital 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.

About Barclays Capital
Barclays Capital is the investment banking division of Barclays Bank PLC. With a distinctive business model, Barclays Capital provides large corporate, government and institutional clients with a comprehensive set of solutions to their strategic advisory, financing and risk management needs. Barclays Capital has offices around the world, employs over 20,000 people and has the global reach, advisory services and distribution power to meet the needs of issuers and investors worldwide. For further information about Barclays Capital, please visit our website: www.barclayscapital.com.

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