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

Guide to the Markets

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Key takeaways:

Over the last three months, a less hawkish Federal Reserve and China stimulus headlines have clearly improved risk sentiment in Europe. The most recent European Central Bank (ECB) meeting also surprised the market with a more dovish outlook than expected, with growth and inflation expectations both revised downwards. This change in outlook forced the governing council of the ECB to extend its forward guidance until the end of the year and announce targeted longer-term refinancing operations (TLTRO) support for banks at a much earlier point than the market was forecasting.

Guide to the Markets presents a wide range of macroeconomic data that can help liquidity investors assess the economic backdrop and position their portfolios against an uncertain backdrop. This quarter’s Guide covers several key issues for European investors, including:

  • Lead indicators - Considering that risks of a global slowdown fuelled by a trade war/US recession have increased, investment intentions and consumer and business confidence data will need to be closely monitored. (p. 4, 5, 13)
  • Inflation - ECB president Mario Draghi recently stated that “inflation convergence is delayed and not derailed” when fielding questions on the current growth slowdown. We will be closely monitoring upcoming inflation prints, specifically wage inflation in the quarter. (p. 7, 8, 25, 27)
  • Domestic demand - A downturn in global demand, market participants will be closely watching whether the downturn in external demand will spill over to domestic demand. The ECB recognises that risks to the consumer have also increased to the downside. (p. 22, 23, 24)

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