The Q3 19 Global Outlook from Barclays Research explains why the recent bond rally does not signal a dire economic outlook and highlights that the US economy and its financial markets, supported by central banks ready to pre-emptively offset economic risks, will likely continue to support global economic growth.
Watch a four-minute video discussion of Global Outlook: Monetary tide keeps markets afloat with Ajay Rajadhyaksha, Head of Macro Research.
We do not fully subscribe to the view that equities are simply at wrong levels and will weaken as they start to reflect weakening economic fundamentals. Instead, we feel that the bond rally is largely explained by investors recalibrating sharply lower than what they believe is the neutral policy rate in the US and Europe.Ajay Rajadhyaksha, Barclays Head of Macro Research
The latest Global Outlook highlights several macro themes, including:
The Q3 Global Outlook recommends an overweight allocation to global equities over fixed income, with a preference for US stocks with low international sales, which are less likely to be negatively impacted by trade headlines.