Asset Class Return Forecasts - Q3 - 2019

Monday 08 July 2019

Research / Market

Asset Class Return Forecasts - Q3 - 2019

We expect economic growth to evolve around potential for most developed economies in 2020. It could subsequently decrease below potential in 2021 driven by a deteriorating cyclical environment and still anaemic global trade. Nevertheless, growth should stay in positive territory. 

In the developed economies, central banks are expected to cut their policy rates to mitigate the economic slowdown. The ECB is expected to move back to an unconventional monetary policy. In that context, short-term rates are likely to initially decline, yield curves steepen, spreads widen moderately, mostly on low ratings, and default rates rise from current levels for the HY sector.

For further details, please refer to Asset Class Return Forecasts (Q2 2019) available at  Asset-Class-Views-Medium-and-long-term-expected-returns .

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31/01/2020 Research / Market

Global Investment Views - February 2020

At the start of the 2020s, markets continued to be dominated by geopolitical issues, with short-lived Iran tensions at the forefront initially, followed by the news regarding a phase one trade deal between the US and China. Now, growth expectations are becoming the main driver of the market. That’s why the recent volatility due to the news about the spreading of the corona virus in China is higher than in the case of US-Iran tensions, as the epidemic could harm China (and global growth) if not contained soon (not our base case at the moment). Other than this issue, recent data point to a ‘so far, so good’ assessment as Germany has avoided a recession and the Euro area is bottoming out. Inflation uptrends are materialising to some extent, but risks appear to be limited and the overall inflation outlook remains benign. Central banks are likely to continue to pause on policy changes, which should help to maintain dovish financial conditions across regions. Therefore, in the search for further growth, attention is globally moving towards fiscal measures: Japanese stimulus package; approval of 2020 Budget Laws for Indonesia, the Philippines and India; and hopes for support in Germany, the UK and broader Europe (€1tn European Green Deal).