CIBC Asset Management Perspectives—Roaring back to life
The global economy will enjoy its strongest growth on record over the next four quarters, as the recovery continues from the deepest recession since World War II. On the COVID vaccination front, herd immunity is finally within reach in a growing number of countries. Developed world governments also have an impressive arsenal still at their disposal due to the full cooperation of their respective central banks.
Equity: Equities in most countries are moderately but not extremely overvalued. Cyclical forces will likely push equities higher, but high valuation could limit potential gains.
Fixed Income: We continue to favour emerging market (EM) debt based on a number of factors including our upbeat forecast on commodities and China and our bearish USD long-term view.
Currencies: We expect the U.S. dollar downtrend to resume, given the global economic recovery, the Fed’s policy rate anchored near zero and the adoption of Average Inflation Targeting (AIT) that implicitly targets a weaker U.S. dollar.
China: Consensus opinion is underestimating the strength of the foreign global demand that will benefit China. Historically, periods of strong global growth have been associated with positive economic surprises in China.
Perspectives Video Commentary with Luc de la Durantaye