Recent data from across developed markets has confirmed that underlying inflationary trends remain soft.
We are upgrading our view on equities to reflect early signs of an upturn in macroeconomic data, falling recession risk and an increase in the chance of at least a limited U.S.-China trade deal.
Armageddonists and the portfolio cost of fear, 2010-2019
We emerged with a cautious near-term view from our latest quarterly strategy meeting in early September. In our base case scenario, the global economy is expected to narrowly avoid recession and continue to grow, albeit much more slowly.
In this paper, we assess the potential risks associated with such a strategy by stressing capital requirements using spread-implied ratings.