Themes and implications from the Global Fixed Income, Currency & Commodities Investment Quarterly
Markets, economy, stocks, growth, global, fixed income, international, asset classes
Predicting recessions is not easy and we do not claim to have uncovered a perfect crystal ball. What we have developed is a framework for tracking the risks, and potential magnitude, of a downturn in the US economy.
Small businesses in the US are becoming more cautious about the economic outlook – the National Federation of Independent Business’ (NFIB) Small Business Optimism Index fell 1.3 points to 101.8 in September.
The current U.S. earnings growth downcycle has been largely consistent with the recent deterioration in macroeconomic momentum.
While no deal is not the most likely scenario in our view, the risks are rising. The UK outlook is binary. A Brexit deal could see sterling bounce to 1.40 against the dollar, but no deal on 31 October could see a further slump to 1.10.
Given our view that the global economy is just as likely to contract as expand over the next three-to-six months, is it now time to position fixed income portfolios more defensively?
Key findings from the Multi-Asset Solutions Strategy Summit