Macro views

Macro update - Life in the time of the virus: what’s next for markets?

Steven Bell rounds up the month’s economic news and answers your questions on the outlook for financial markets.
Juli 2020

Steven Bell

Managing Director, Portfolio Manager & Chief Economist, Multi Asset Solutions

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Risk Disclaimer 

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management. The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested. The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

The data being released at the moment is showing a strong bounce in the US economy: Second waves will cause some economic damage; there will be a setback in July and August, but we believe that the recovery will merely be delayed.

 

PMIs have bounced, and forward estimates could be revised upwards: At the global level, the PMI numbers have bounced – the June numbers are beginning to come out and they’re showing a further improvement. They’re firm, and stronger than expected.

 

Structural changes and weak demand to hold back interest rates and inflation: As for longer-term issues, I do not expect the outpouring of government borrowing to push up interest rates; trends at present are in the opposite direction.

 

Equities to outperform government bonds: This is a positive background for risk assets, but we have already had the bulk of the rally. Government bonds are needed for hedging in many portfolios, but I believe that they will underperform cash in the medium term, the best returns will come from equities.

Risk Disclaimer

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management.

The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

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PMIs have bounced and earnings estimates could now be revised upwards, but don’t get too excited…

 

 

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