Equities – Average performance =
- True to form during bull markets, the recent equity correction was swift, and most markets rebounded nearly as fast. While developed markets could consolidate their recent gains over the near term, we remain constructive about the intermediate- and long-term prospects.
- We don’t see a major downturn on the horizon for the global economy. Growth should shuffle along led by the U.S., most developed economies, and a handful of better-positioned emerging economies. China’s economy will likely slow further. However, monetary and fiscal stimulus, combined with services sector growth, should help it avoid a hard landing.
- Valuations are below or near average for most markets, and earnings growth should persist in Europe and pick up moderately in the U.S. in 2016.
Fixed income – Below-average performance –
- Global fixed income markets are laser-focused on monetary policy and the potential divergence that could soon develop with the Federal Reserve headed toward raising interest rates and the European Central Bank, among others, likely easing further. Prospects for a Fed rate hike in December increased following the slightly hawkish policy statement from the central bank’s recent meeting.
- Regardless of when the first hike comes, we continue to believe the Fed is aiming to merely gradually wind down extraordinary monetary policies established during the financial crisis and normalize interest rates above the 0% level rather than tighten monetary conditions outright. We expect the Fed Funds rate to rise slowly and eventually crest at a lower level than in previous cycles.
Global Asset Views
Source - RBC Wealth Management
(+/=/–) represents the Global Portfolio Advisory Committee’s (GPAC) view over a 12-month investment time horizon.
+ Positive implies the potential for better-than-average performance for the asset class or for the region relative to other asset classes or regions.
= In-line implies the potential for average performance for the asset class or for the region relative to other asset classes or regions.
– Negative implies the potential for below-average performance for the asset class or for the region relative to other asset classes or regions.