Fragile 20-20 vision

Global Outlook 2020 and 2021

 

  • An interim trade deal between the US and China should ease global trade winds. Combined with stimulus enacted over a range of economies, we expect a stabilisation and modest rebound in global activity in H1 2020.
  • Yet political uncertainty, including in US, Europe, UK and Latam is likely to persist and cap any business investment rebound next year.
  • Spillover from manufacturing weakness to services is expected to weigh on Eurozone activity next year. Renewed headwinds, this time on the US household sector, threatens US activity falling below stall speed in 2021.
  • Improving activity should reduce the need for further monetary policy easing, beyond perhaps some residual loosening in China and other EM economies. However, we forecast renewed US softening to lead the Fed to resume easing in Q4 2020.
  • The ECB looks likely to be limited on monetary space, with pressure mounting for fiscal stimulus, which we expect increasingly in 2021.
  • In the short term, yields could rise further if the activity outlook improves, while the immediate reaction to insurance cuts has been positive for credit spreads. 
  • Insurance cuts have seen the USD lose some of its lustre in carry terms. Longer term, a divergence of policy stimulus (monetary policy to fiscal) in the Eurozone would further support the euro outlook.

 

 

Access the full slide deck

 

DISCLAIMER

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. 

It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.