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Barclays Research remains positive on equities as US economy surges ahead. Global Outlook: The US, and then the rest highlights that the US economy and its financial markets, propelled by last year’s tax cut, will likely continue to support global economic growth. Our analysts believe that neither global trade sanctions nor potential contagion from emerging markets is likely to upset this growth trajectory.

Watch a three-minute video discussion of Global Outlook: The US, and then the rest with Ajay Rajadhyaksha, Head of Macro Research.

We think the US yield curve will keep flattening into year-end. But we don't think this signals a recession in the near future, or that it will restrain the Fed from continuing to hike.
Ajay Rajadhyaksha, Barclays Head of Macro Research

The last Global Outlook of 2018 includes deep dives on several macro themes, including:

  • The dip in emerging markets -  Even with more attractive valuations than in early 2018, we still do not believe that it’s time to pivot towards emerging markets. EM currencies will continue to struggle against USD until the Fed changes tack, which is unlikely in 2018. Moreover, US-China trade frictions are unlikely to dissipate anytime soon.
  • The impact of trade war - Two of the world’s biggest economies, the US and China, are in a full-on trade war, with no end in sight. However, the economic damage should be limited, but risks are tilted to the downside. If business investment pulls back, financial markets get far more worried, or trade wars expands to other countries, the economic hit will be considerably greater. But that remains an unlikely outcome in 2018.

Barclays Research argues that the global economy is more dependent on the US than in 2017, but the aggregate growth forecasts have not come down very much, despite the headlines on trade and emerging markets frictions. US equities are likely to continue to grind higher, and continued capital inflows into the US should support all USD assets.

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Related content 

Emerging market volatility: Global crisis or series of one-offs?

Are we headed toward a crisis that could undo ten years of economic expansion? Our Research analysts debate whether EM volatility could tip the developed world into recession.


Q3 Global Outlook: Glass half full

The global macroeconomic environment remains supportive despite trade frictions, due mainly to strong US growth and contained 10-year Treasury yields.

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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: The US, and then the rest is now available to Investment Bank clients on Barclays Live or on the Barclays Live App.

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