Investment strategy

A pause that refreshes, but for how long

18 January 2019 -

Fixed income quarterly outlook Q1 2019

Key points

  • Tighter financial conditions and a weakening global backdrop have led the Federal Open Market Committee to signal a pause in the hiking cycle. We suspect other developed market central banks could put their own normalization plans on hold this year.
  • Continued stimulus from Chinese authorities, combined with signs of progress in the US-China trade dispute, also support our cautious optimism on the global growth outlook this year. Global growth is set to slow this year, but concerns over a 2019 recession in the US or other major economies are likely misplaced.
  • Still, market volatility is likely to remain elevated. Monetary policy is not providing the level of accommodation it was a year ago, the fiscal impulse is set to fade in the US, and corporate profit growth in most economies is slowing. A host of political risks will continue to weigh on risk sentiment as well.

 

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