Explore research-driven analysis of evolving market themes
Downside risks loom even larger
July 2018
While the outlook for global growth is favorable — albeit less synchronized — the view could change if the Federal Reserve overtightens and trade spats escalate.
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- Brett S. Kozlowski, CFA
- Christian J. Galipeau and Brendan T. Murray, Senior Investment Directors; Seamus S. Young, CFA, Investment Director
- D. William Kohli
- Daniel J. Graña
- Global allocation insights
- Jason R. Vaillancourt, CFA
- Jo Anne Ferullo, CFA
- Katherine Collins, CFA, MTS
- Katherine Collins, CFA, MTS, Head of Sustainable Investing and Stephanie Henderson, Analyst, Equity Research
- Matthew F. Beaudry
- Michael J. Atkin
- Michael P. Wands, CFA
- Putnam Investments
- Robert J. Costello III, CFA
- Ryan J. Beaudoin, CFA
- Shep Perkins, CFA, and Simon Davis
Interest rates and trade create headwinds
While the outlook for global growth is favorable, challenges to fixed-income markets are increasing.
The unrecognized diversification profile of securitized debt
Securitized debt may be less familiar to many institutions, but it offers the diversification and potential performance profile that many of them seek.
Politics and protectionism may restrain economic momentum
Trade war and tighter Fed policy put pressure on the global financial system.
Fed actions create a long-term opportunity
We believe fiscal stimulus will lead the Fed further down the tightening path, and could potentially create opportunities for long-term investors.
China’s quest for artificial intelligence
China's hardware tech companies are embracing artificial intelligence, including self-driving cars and surveillance, as the government promotes AI hubs.
Italy’s Political Opera
Italy’s Giuseppe Conte was sworn in to power in early June to head a new populist government — made up of an unlikely marriage between the anti-establishment 5-Star Movement (M5S) and the far-right League party.
Sustainable investing: Assessing the choices
Sustainable investing is growing in popularity, and investors should be thoughtful about choosing from a range of strategies and portfolios.
The inflation conundrum
Our outlook contains some small but noteworthy shifts. Rising oil prices are expected to lift slightly the trajectory of inflation in the United States because of the pass-through to consumer prices.
Trump’s trade bluff?
While there is low probability the tariff dispute between the United States and China will erupt into a full-scale trade war, the markets are struggling to grasp the implications of the measures.
Potential benefits of prepayment risk
Investors seeking strategies to diversify away from corporate credit and interest-rate sensitive sectors may consider prepayment risk.
Are non-U.S. stocks truly cheap?
On the surface, U.S. stocks appear more expensive than non-U.S. stocks, but a quantitative comparison reveals the impact of sector valuations.
Cross currents in global markets
Evidence of economic strength, including a tight labor market and rising wages in the United States, drove Treasury yields higher.
Sparking a U.S. trade war?
We are seeing a return of the threat of protectionism in the United States.
The yield curve puzzle
The outlook for U.S. and global growth remains solid in 2018. However, the relationship between the improving U.S. economy, the Fed funds rate, and the benchmark 10-year Treasury yield is somewhat of an enigma.
China: A view through the looking glass
With President Xi Jinping's second-term underway, growth in China is expected to slow in 2018 as government reins in spending.
Looking for impact in CEO compensation
It’s important for investors to be able to understand how a company’s performance relates to CEO compensation.
How the Japan election may influence global interest rates
The Japan election could have consequences for the future leadership of the Bank of Japan and the country's impact on global interest rate trends.
Using and enhancing ESG investment data
ESG data is having investment impact but is still evolving, and stands to benefit from feedback offered by fundamental analysts.
Why Brazil's crisis creates new concerns
The revelations of May 17 may pose a threat to President Temer's administration, and therefore a threat to Brazil's short- and medium-term economic outlook.
See the dove in the Fed's dot plot
The market sees a more hawkish Fed in the December 2016 rate hike, but we see see signs of a dove in the Fed's dot plot.
Diversifying stable value with traditional GICs
Stable value portfolios that avoid traditional GICs may be missing a diversification opportunity that also offers liquidity.
Negative interest rates may have unforeseen consequences
Today's experiments with negative interest rates in Europe and Japan have potential negative consequences for government bonds and the banking sector.
Recognize the value of flexibility as central banks experiment
Unconstrained diversification may be valuable for fixed-income investors as markets monitor possible changes in central bank policies around the globe.
Proceeding toward Brexit: The risks for investors
With the United Kingdom beginning to move forward with Brexit, we see risks to the economy, the pound, and the markets.
Italy's bank troubles challenge EU
Troubled banks in Italy pose a new challenge to the EU, one that has been compounded by the U.K.'s vote in favor of Brexit.
Can government reform brighten EM growth outlook?
Our research has identified both near- and long-term investment opportunities in EM countries that may benefit from a combination of policy reform, policy independence, and insulation from falling commodity prices.
Reassess risk as interest rates creep up
Historically when the Fed raises rates, Treasury rates have tended to move higher — a dynamic that poses risk to today's benchmark-oriented portfolios.
Don’t underestimate this economy
Despite worrisome headlines about the economy, recent data show only a modest loss of momentum.
Constrained credit threatens growth
Stock market rallies often need to climb a wall of worry, and we see that wall getting higher.
How alts have performed in the long run
Comparing the long-term returns and volatility of alternative investments can provide clues on their potential for diversifying a portfolio.
The views and opinions expressed are those of the speaker, are subject to change with market conditions, and are not meant as investment advice.