Guide to the Markets - J.P. Morgan Asset Management

Guide to the Markets

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Key takeaways:

The run-up to 2018 marks the first time in several years that we are highlighting no near-term systemic risks for Europe. A year on from the political shockwaves caused by the election of Donald Trump and the unexpected outcome of the Brexit referendum, we appear to have reached a sweet spot for the region’s economy: growth momentum is now very strong and the entrenched economic recovery is clearly improving sentiment towards the eurozone.

Guide to the Markets presents a wide range of macroeconomic data that can help liquidity investors assess the economic backdrop and position their portfolios, covering issues including:

  • Economic growth in Europe was again largely fuelled by household consumption, with more favourable labour market dynamics paving the way for a fall in the household saving rate and giving the consumer the confidence to embrace credit. With unemployment continuing to trend downwards, we expect consumer confidence and spending to remain elevated in 2018.
  • The ECB’s clear rhetoric and forward guidance suggests monetary policy will remain accommodative and rate hikes are unlikely until 2019, suggesting that money fund investors may need to wait another year before they benefit from higher rates in Europe.
  • The Bank’s commitment will continue to drive growth momentum in the real economy, with growth now at its fastest rate in 10 years. But with inflation still notable through its absence, we are increasingly cautious the risk that the ECB could normalise rates faster than is currently priced (0% by summer 2020), if and when the inflation trend picks up.

As you consider these important topics, we will be happy to share our market views and tailor liquidity solutions to best meet your needs.