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Barclays’ Head of Macro Research, Ajay Rajadhyaksha, discusses the outlook for Q2 2018, as outlined in a recent report, Global Outlook: Bumpier road ahead. Barclays Research turns cautious on risk assets after the equity market downdraft in February and highlights investors' heightened sensitivity to the risk of higher inflation, renegotiated trade agreements and tighter monetary policy. 

Watch a three-minute video discussion of Global Outlook: Bumpier road ahead with Ajay Rajadhyaksha, Barclays Head of Macro Research

We do not expect a global trade war, but ongoing trade skirmishes are likely and we would expect headline risk to occasionally rattle markets in ways it did not in 2017.
Ajay Rajadhyaksha, Barclays Head of Macro Research

The latest Global Outlook argues that while such concerns are premature, the downdraft signals a more general end to the unusually stable market conditions of 2017. In the current economic environment, Global Outlook turns tactically cautious on risk, scaling back its longstanding equity overweight position over fixed income to a mild underweight, with most going into US fixed income. Barclays Research moves to a more selective outlook on emerging market assets, also a change from a longstanding EM overweight recommendation.

Global Outlook highlights two developments that have improved the asset allocation calculus for bonds:

  • The year-to-date re-pricing of financial assets has enhanced the relative appeal of fixed income, mainly in the US.
  • Financial market volatility has returned as investors respond more normally to news flow about economic, political and business risks.
About Global Outlook

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

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