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Q4 Global Outlook: Too early to play defense
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In the latest Global Outlook, Barclays’ Research team expects equities to continue to rally in the current low-volatility macroeconomic environment and global political backdrop.

Ajay Rajadhyaksha, Barclays’ Head of Macro Research, discusses the outlook for Q4 2017, as outlined in a recent report, Global Outlook: Too early to play defense. With markets rallying and elevated asset valuations potentially more of a concern, some investors are wondering if valuations and positioning point to a tactical pull-back from risk.

The latest Global Outlook argues that investors should be encouraged that the equity rally has been driven by earnings growth, not multiple expansion, and believes stocks should still out-earn bonds. The report cites tightening monetary policy as the catalyst that could upset valuations in risky assets, but argues that low inflation mitigates this risk.

The report and video above highlights:

  • Calm fundament backdrop: The low volatility environment in 3Q 2017 should continue into the fourth quarter. We expect about 4% global growth to continue into 2018, upgrade our euro area and Japan forecasts, expect a mild deceleration in China, and hold our 2% U.S. growth forecast.


  • Global equities will out-pace global fixed income: We remain long global equities over global fixed income, and recommend non-U.S. equity markets in particular. In the bond market we like U.S. high yield and parts of EM credit. We also anticipate USD to strengthen for a few months before continuing to drift downwards.


  • Slow pace of central bank policy normalization: Central bank steps towards policy normalization are likely to be gradual and tentative until inflation becomes a more pressing issue, which seems unlikely for the next few quarters.
The facts are that the global economy continues to grow at a decent clip, half a percent stronger than in 2016. Every major economy is expanding, which has not been true for much of the post-2008 period, and most upside surprises are coming from those that still have room to run.
Ajay Rajadhyaksha, Head of Macro Research
About Global Outlook

Barclays’ Global Outlook, published quarterly, provides an assessment of all major economies and markets, and outlines recommendations for investors. Further views from Global Outlook: Too early to play defense are now available to Investment Bank clients on Barclays Live or on the Barclays Live App.

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Q3 Global Outlook

Investors are asking whether the time has come to fade risk assets. The latest Global Outlook from Barclays Research argues that the answer is "no".

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