Q3 2019 outlook: A delicate balance

As we enter the third quarter, we are in a finely balanced position epitomised by an overly pessimistic bond market on the one hand, and an optimistic equity market on the other. We think we are somewhere in between those views.

The bond market, egged on by dovish central bank rhetoric and US-China trade war concerns, is fearing recession, and the equity market is hoping for continued dovishness and progress in trade disputes. The US economy is slowing down but we don’t think it will slip into recession, so the extent of dovish Fed expectations may be overdone. And trade talks will rumble on - this is not a fleeting battle, it’s a drawn-out war.

Central banks are attempting to extend a cycle that has already gone on for a long time, and this ratchets up the potential volatility we could see as investors weigh up data, policy and political developments. The best defence for investors is maintaining clear-eyed, sober analysis and focussing on the long term.

Paras Anand, Head of Asset Management, Asia Pacific
 

To read our views in full,  download the report or slides below.

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