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Global Investment Outlook Q2 2021

How's your appetite for risk assets?

Approaching the 100th day of his presidency, U.S. President Biden has made good on several of his election pledges and Wall Street has responded with an even greater post-pandemic rebound. A wobble in the bond markets hasn’t (yet) turned into a rout, and despite inflation expectations running hot, the Fed appears willing to stay the course for now.

Inflation risks and how to pay for the pandemic are top of mind for investors now. This selection of outlook papers tackles the inflation issue and its implications for asset markets head-on. There also appears to be a broadly consensual view among institutional asset managers on how the post-pandemic global recovery is likely to play out.

Investment Outlook: Risky mountains

World Economic Outlook (IMF, Apr 2021)

The IMF presents their outlook in which the somewhat uncertain prospects for countries and sectors are discussed.

The Big Picture – Global asset allocation Q2 (Invesco, Mar 2021)

For compliance reasons, this paper is only accessible in certain geographies

In their asset allocation paper, Invesco stick with what has worked since their 2021 outlook was published. They continue to favour long cyclical assets (albeit reducing the overweight on Europe and emerging markets) and are coming down to neutral in commodities. They believe sovereign bonds now offer better value, although remain underweight.

House View Q2 (Aviva Investors, Apr 2021)

For compliance reasons, this paper is only accessible in certain geographies

Aviva Investors continue with their above-consensus outlook, based on several positive economic drivers. Adjustments to growth projections have been made to better reflect more recent market news.

Inflation: Short-term aberration or longer-term threat? (QMA, Mar 2021)

Sushil Wadhwani, Chief Investment Officer of QMA Wadhwani, shares his inflation outlook and how rising inflation could affect the pricing of risk assets.

Invesco Fixed Income: Global fixed income strategy (Invesco, Mar 2021)

For compliance reasons, this paper is only accessible in certain geographies

Invesco expects a return to pre-pandemic growth levels by the end of 2021, with a lot of the upturn coming in the service sector, particularly those badly impacted by coronavirus. The interplay of inflation expectations and negative yields elsewhere is likely to provide support to U.S. sovereign and credit markets.

Fixed Income Insight – Q2 2021 (HSBC AM)

For compliance reasons, this paper is only accessible in certain geographies

HSBC Asset Management remains alert to any changes in central bank rhetoric and policy and suggests inflation and other short-term risks are skewed to the upside.

Fixed Income Market Outlook Q2 (PGIM Fixed Income, Apr 2021)

PGIM Fixed Income outlines their long-term bullish stance in this outlook. They do, however, believe the shorter term looks trickier, with higher inflation possible as strong growth continues.

Leveraged Loan Market Outlook – What will 2021 bring? (M&G Investments)

For compliance reasons, this paper is only accessible in certain geographies

M&G Investments highlights the attractiveness of the leveraged loan market, where yields remain high relative to other credit markets. Volatility is likely to persist, particularly related to default risk and policy misinterpretation.

Gold, Commodities and Reflation (World Gold Council, 2021)

For compliance reasons, this paper is only accessible in certain geographies

World Gold Council’s Johan Palmberg, Senior Quantitative Analyst, views the recent commodity rally from a historical perspective, and notes that gold often underperforms at the start of commodity super-cycles.

Emerging Market Debt Attractive in Recovery (PineBridge Investments, Apr 2021)

PineBridge Investments continues to see opportunities in emerging market debt, based partly on improving country fundamentals.

Global Investment Outlook – Spring 2021 (RBC GAM)

For compliance reasons, this paper is only accessible in certain geographies

RBC Global Asset Management’s latest outlook maintains their overweight stocks and underweight bonds positioning, given the powerful rebound seen in the U.S. economy.

Investment Outlook: Opportunity amid uncertainty (Franklin Templeton, Apr 2021)

For compliance reasons, this paper is only accessible in the EMEA region

In their outlook paper, professionals from Franklin Templeton come together to share their views on the continuing uncertainty that persists in markets.

Global Investment Views (Amundi, Apr 2021)

For compliance reasons, this paper is NOT accessible in the United States

Amundi thinks risks of a taper tantrum are overblown, with the Fed likely to continue its bond buying programme. They also discuss rising inflation and the need for fiscal stimulus in some economies.

The Return of Inflation? (DWS, Mar 2021)

DWS looks at whether the return of inflation is structural or just temporary. They also look at the possible effects on capital markets.

Perspectives in Today's Real Estate Markets: Q1 (Nuveen, Mar 2021)

The real estate team at Nuveen believe capital allocated now will pay long-term dividends. An upturn in inflationary expectations and bond yields may refocus attention on the asset class, which should also benefit from an improving global economy.

Global Economic Outlook Q2 (KPMG, Mar 2021)

This report from KMPG highlights the increasing role of the state in the global economy, particularly in sectors that appeared ill-prepared for the pandemic.

Will Productivity and Growth Return After Covid‑19? (McKinsey & Company, 2021)

McKinsey & Company suggest that a rise in post-pandemic productivity might improve global growth rates by up to a full percentage point out to 2024.

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