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The global macro environment remains supportive despite the current economic backdrop – a Q1 slowdown, persistent political volatility in Europe and rising US trade frictions. In the Q3 2018 Global Outlook: Glass half full report, Barclays’ Head of Macro Research Ajay Rajadhyaksha discusses our positive outlook on risk assets despite trade frictions, as well as key macro themes in the latest report from Barclays Research.

Watch a three-minute video discussion of Global Outlook: Glass half full with Ajay Rajadhyaksha, Barclays Head of Macro Research.

Risk assets have their mojo back. However, trade remains a tail risk to our positive outlook. If tit-for-tat escalations continue, markets could at some point downgrade growth expectations.
Ajay Rajadhyaksha, Barclays Head of Macro Research

Global Outlook also argues that the US is likely to pull ahead of other major economies for the next few quarters. As such, our Research team recommends a modest overweight for global equities over fixed income and a tilt toward DM assets over EM, with a selective posture in the latter.

Our analysts highlight three macro themes that underpin the “glass half full” environment: 

  • Risk assets remain resilient in the current macro environment, as growth is decent, inflation pressures are contained, central banks have given more clarity on monetary policy and corporate earnings are strong.
  • US short-term rates are among the world's highest, due mainly to expectations of improved returns in the US. This marks a rare instance of the world's risk-free asset being among its best yielding.
  • Investors should be less concerned if 10-year Treasuries rise above 3%. Barclays Research does not expect a break-out in longer yields and believes supply fears are overdone, as any sell-off is likely to be limited and unlikely to cause a lasting risk-off.
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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: Glass half full is now available to Investment Bank clients on Barclays Live or on the Barclays Live App.

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