As an active manager, we believe that insight and understanding are the keys to investment success.Some of the biggest factors moving markets today are the shifting monetary policies of central banks and the changing political landscape. Our investment experts help you understand what it all means for our investment outlook and what it could mean for your portfolio.
With the US economy slowing and inflation low, we expect the Fed to confirm a pause in its monetary policy normalisation. Given the controlled slowdown in the US economy and equity-market momentum, we believe the Fed has found the perfect balance.
Much like last year's underdog, the stock markets faced some obstacles going into 2019—plenty that would give them reason to extend their end-of-2018 slide. But also like the Cinderella team, stock markets overcame adversity and rallied last month, continuing to build on their impressive gains since the start of the year.
Recent ECB comments suggest that the horizon for a rate hike may be moving further away, based on the central bank’s uncertain growth outlook and concerns over weak inflation. The ECB is also keen to preserve banks’ ability to lend to the euro-zone economy.
In recent years, the markets underwent massive shifts in technologies, demographics, politics and policies that rendered many old models obsolete. Investors must recognize how persistent and irreversible these trends are – or they could find themselves exposed to new risks that jeopardise their financial goals.
With the Fed having largely achieved its objectives of full employment and price stability, we expect short-term rates to stay unchanged at the FOMC’s next meeting. This should be good for investors, but don’t rule out a rate hike by the end of the year if inflation surges, or if tariff- or Brexit-related risks recede.
Changes in the euro zone’s economy have raised expectations that the central bank will be more precise at its next meeting about what’s causing the slowdown. We think the ECB will continue delaying rate hikes while also announcing a new liquidity program for banks.
The European Central Bank’s gradual normalisation of its monetary policy should continue, but the economic slowdown in the euro-zone will likely delay any rate increases, and the window of opportunity is becoming increasingly narrow.
Fed Chairman Powell learned the hard way that his comments, even those made outside of official Fed communications channels, can move markets. The Fed is on a mission to make itself less important in the decision-making of savers, investors, consumers and governments.