Keep a watchful eye on the Fed
Central banks’ use of quantitative easing and ultra-low interest rates kept Western economies from flat-lining in recent years. But central banks have begun using the language of economic expansion rather than economic recovery – which means tighter monetary policy is on the horizon, albeit at differing paces in different regions. The Fed is already starting to normalize, which could bring volatility to the financial markets – as could a loss of economic momentum. That said, new US Federal Reserve Chair Jerome Powell will likely be cautious with rate rises and should favour further market deregulation – one of the reasons why we continue to favour financials.