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The Q1 2019 Global Outlook: Lower expectations from Barclays Research suggests that after years of strong returns and low volatility in the run-up to 2018, investors need to prepare for a world of lower returns and higher volatility.

Watch a three-minute video discussion of Global Outlook: Lower expectations with Ajay Rajadhyaksha, Head of Macro Research.

The report emphasizes that while the eurozone and other economies outside the US disappointed in 2018, non-US growth should stabilise near current levels, instead of weakening much further. And while we expect a near-term risk rally until year-end 2018, we forecast 2019 will be a year of low single-digit total returns in most large financial assets and higher volatility, especially if the end-of-year risk rally materialises.

This is by no means a call for the start of a bear market, but investors need to lower their expectations and be nimble. The good news is that 2019 returns are unlikely to be as bad as 2018.
Ajay Rajadhyaksha, Barclays Head of Macro Research

The Global Outlook for Q1 2019 includes deep dives on several macro themes, including examinations of:

  • Factors leading to disappointing growth in Europe
  • Emerging market challenges, both cyclical and structural
  • Possible continued outperformance of US versus EU equities into 2019

Against this backdrop, Global Outlook recommends an overweight allocation to higher quality US bonds, such as investment grade and agency MBS, over global equities.

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The Flip Side podcast

This podcast series features a lively debate between two Barclays’ Research analysts who take opposing viewpoints on timely topics of importance to economies and businesses around the globe.

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About the analyst

Ajay Rajadhyaksha is a Managing Director and Head of Macro Research at Barclays, based in New York. He oversees the global research and strategy efforts of the economics, rates, FX, commodities, emerging markets, securitised, and asset allocation teams. Since joining Barclays in 2005, Mr. Rajadhyaksha has held various positions, including Co-Head of FICC Research and before that, Head of US Fixed Income Research and US and European Securitised Research.

Previously, he worked at Bear Stearns, where he started in Mortgage Strategy before moving to the Interest Rate Derivatives Strategy team. Mr. Rajadhyaksha received a bachelor’s degree in Electronics Engineering from the University of Mumbai, an MBA from the Indian Institute of Management Calcutta and a master’s degree in International Management from Thunderbird, the American Graduate School of International Management in Arizona.

Read the full report

Barclays’ Global Outlook, published quarterly, provides an assessment of all major economies and markets, and outlines recommendations for investors. Global Outlook: Lower expectations is now available to Investment Bank clients on Barclays Live or on the Barclays Live app.

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