As the trade war intensifies and economic growth disappoints, global interest rates continue to move lower—there are 19 bond markets with a 10—year government bond yield below 1%. With very little policy leeway left, monetary authorities now have to rely on fiscal policy-makers, who need to take on a bigger role to support global growth.
Asset class highlights
Equity: Although Canada doesn’t face the trade war and political uncertainty that other markets do, the global slowdown will limit the upside for cyclical Canadian equities.
Fixed Income: While bond yields in developed markets may have already seen a bottom, they are unlikely to march meaningfully higher in the short term.
Currencies: For other currencies to move decisively higher against the U.S. dollar, monetary authorities in the rest of the developed world have to take a more hawkish turn. This is not likely to happen anytime soon.
Commodities: The quick return to lower oil prices after the drone attack on Saudi oilfields highlights a situation where market supply will outstrip demand as we move into 2020.
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