Economic and policy fundamentals have mainly surprised to the downside in recent months. The Q4 2019 Global Outlook from Barclays Research explains why an anticipated soft patch in economic activity in the coming quarters may weigh on sentiment toward growth-sensitive assets.
Watch a four-minute video discussion of Global Outlook: Time to play defense with Ajay Rajadhyaksha, Head of Macro Research.
We expect a growth slowdown, but not a US or global recession, given healthy labour markets and consumption, as well as further easing from most central banks. And if our lackluster economic baseline worsens into a stronger drop in economic activity, market focus could shift to the limits on monetary policy and the slim prospects for new fiscal stimulus.Ajay Rajadhyaksha, Barclays Head of Macro Research
The latest Global Outlook highlights several macro themes, including:
The Global Outlook turns towards a more defensive posture and recommends an overweight allocation to higher-yielding global fixed income over riskier assets such as global equities, with a preference for US and European corporate credit markets, agency spread products in the US, as well as emerging market debt, both local currency and dollar.