Signals from fixed income and equity markets on the outlook and an answer to the question of recession or no recession are contradictory. Bonds appear to anticipate a sharp deterioration of the economic prospects, while equities reflect a more positive disposition.
Watch our quarterly asset allocation video with Maya Bhandari, Global Head of Multi Asset, and Daniel Morris, Chief Market Strategist, as they explore this conundrum. They conclude that the coherent answer must be a growth slowdown that is short of a soft landing. This would argue for a cautious stance towards (US) equities and a focus on bonds.
Elsewhere, discounted prices and modest earnings expectations mean there may be opportunities in China and emerging markets, in particular Asian emerging markets.
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