Market Insights

The 10 themes our Asset Allocation team will be mulling over before welcoming 2021.

The more things stay the same…

Q3 Outlook: Taking stock

We stay bullish on risk assets as we believe the medium term outlook for markets has actually improved

Unfortunately for markets, our bearish outlook for 2018 came to pass. For 2019, the key question is how tightening fnancial conditions will impact heavily indebted borrowers – and whether this raises the risk of recession.

In our last quarterly outlook, we flagged our cautious posture on risk assets, taken due to a number of smouldering risks on the horizon. One risk we did not highlight, however, was that a pandemic would break out, causing untold human suffering and economic damage.

Investors have been buffeted by a large number of negative headlines in 2018. We remain of the view that tightening global liquidity conditions are likely to exacerbate market volatility.

Can cyclical tailwinds paper over the structural cracks? And what’s the outlook for global trade, China and equity investors?

While trade tensions have escalated in recent months, we believe the case for emerging markets remains compelling - if investors know where to look.

Many investors combine concerns over overcrowding in factors with capacity fears. We want to help separate these terms and provide some clarity over the current state of factors.

In this quarterly outlook we outline our asset allocation views and address three key questions on equities, US monetarypolicy and emerging markets.

What is a fallen angel? In theological terms, a fallen angel is one who has rebelled and been exiled from heaven.

Investors currently buying UK government bonds are doing so in the knowledge that they are accepting a yield which is lower than the rate of inflation, i.e. the real yield.

It’s tempting to think otherwise, but not all emerging market debt is created equal. In this piece we examine the public, private and external debt profiles of individual emerging markets.