CIBC Asset Management Perspectives A TRICKY BALANCING ACT

Despite the enormous number of headlines focused on U.S. President Trump, the global economy continues to improve in the background. As a result, equity markets have been well supported and continued to push higher. Bond yields have stabilized after their sharp rise in late 2016.

Under our somewhat benign global outlook we project around 3% global growth over the next 12 months central banks will be left to manage a difficult balancing act. Following years of aggressive monetary stimulus, the question of scaling back this support may have unintended consequences. This will be a risk to monitor over the coming year.

Key Insights:

  • Fixed Income vs. Equity: With a continued economic expansion and interest rates facing gradual upward pressure, equities should remain more attractive than bonds.
  • Equity: Emerging Asian equity markets remain our preferred global equity region, but European equities currently offer good potential for catch-up growth at a reasonable price.
  • Fixed Income: Bond yields in the United States and Canada are expected to head higher, but the rise in yields should be modest.
  • Currencies: We expect limited and selective U.S. dollar strength while a select number of emerging market currencies could provide attractive returns.

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