CIBC Asset Management Perspectives – PULLING THE PLUG ON GLOBAL LIQUIDITY
While it took much longer than in past business cycles, we have finally reached the point where excess liquidity is being drained from the global financial system. While the policy-induced global economic slowdown is likely to be relatively mild, global financial markets may have trouble coping as central banks turn off the global liquidity tap. Key Insights:Fixed Income vs. Equity: Equity returns should remain positive but are increasingly at risk. Bond yields are still below fair value and should continue to gradually move up as bond prices decline. Equity: The U.S. continues to face headwinds from both valuation and shrinking profit margins—these will likely limit returns for the foreseeable future. Valuation arguments still favour emerging markets versus other global regions. Fixed Income: Global bond yields should grind higher. Although the global growth outlook has become more uncertain, the steadfast desire to renormalize monetary policy remains intact. Currencies: Canada is vulnerable to tightening U.S. credit conditions and any U.S. policies aimed at widening Canada’s overall trade deficit. For these and other fundamental reasons, we believe it is too early to call a bottoming for the Canadian dollar. Read Perspectives ReportPerspectives Executive Summary Perspectives Video Commentary with Luc de la Durantaye Podcast with Luc de la Durantaye
DoubleLine® is a registered trademark of DoubleLine Capital LP.
Copyright 2020 CIBC Asset Management Inc. Renaissance Investments and Axiom Portfolios are offered by CIBC Asset Management Inc.
™Renaissance Private Investment Program and ™Renaissance Private Pools are trademarks of CIBC Asset Management Inc.
®Renaissance Investments, Axiom and Axiom Portfolios are registered trademarks of CIBC Asset Management Inc.
The Renaissance Investments family of funds and the Axiom Portfolios are offered by CIBC Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
Please read the Renaissance Investment family of funds and Axiom Portfolios simplified prospectus before investing. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer, nor are they guaranteed.
There can be no assurance that a money market fund will be able to maintain its net asset value per unit at a constant amount or that the full amount of your investment will be returned to you. Their values change frequently and past performance may not be repeated. ®Axiom, Axiom Portfolios and Renaissance Investments are registered trademarks of CIBC Asset Management Inc.