Trade disputes are raising the downside risks to our forecast for slightly subtrend growth. We retain our mild underweight to stocks and prefer to take risk in carry assets like credit. Reflecting valuations, we downgrade duration to neutral.
The global economy has slowed, and trade disputes are raising the downside risks to our forecast for slightly subtrend growth. That said, while remaining wary of the signals coming from the bond market, we don’t see the trade shock as truly recessionary f
While tariffs remain a concern, the key issue is the degree—which we deem moderate—of U.S. recession risk. The current global backdrop makes the U.S. dollar unlikely to strengthen. Earnings growth expectations are modest, valuations are undemanding, and expected returns are above average.