Global Markets Q2 Outlook 2020

Global Investment Outlook - Q2 2020

The previous quarter has given investment strategists and asset allocators a lot to think about. Is now a good time to rebalance portfolios? Is the worst of the shock (in response to both oil prices and coronavirus fears) over with? At what point will we know whether global healthcare systems are equipped well enough to manage the coming months? 

Here is a selection of some of the best quarterly outlook documents that are presently available. Perhaps they can provide some answers. 

Comparing Two Financial Crises (Qontigo, Apr 2020)

We compare the current COVID-19 crisis with the early stages of the global financial crisis (GFC) to identify investment strategies that could be helpful in the coming weeks.

Second Quarter Market Outlook (PGIM Fixed Income, Apr 2020)

In the span of less than three months, the novel coronavirus has shuttered much of the global economy, bringing an 11-year economic expansion to an abrupt end. The crisis may become a seminal point for global interest rates and credit spreads. After falling for years, U.S. rates have entered the low realm of their developed market counterparts and may be poised to drift only slightly higher going forward. However, credit spreads across securitized credit, investment grade, high yield, and emerging markets offer historically compelling value, and active management will be more critical than ever in both generating alpha and avoiding losses.

Coronavirus: Our view and strategy (BNP Paribas AM blog, Apr 2020)

These are extraordinary times. The death toll from the coronavirus outbreak could potentially be shockingly high. Governments around the world are taking extreme measures almost on a daily basis that are unheard of in peacetime, because, to put it bluntly, humanity is at war with the virus.

Asian fixed income: Forget fear, focus on fundamentals (Manulife IM blog, Apr 2020)

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

Concerns of a COVID-19-induced economic shock, coupled with the recent sharp decline in oil prices, introduced additional volatility and uncertainty to global and Asian financial markets. During periods of heightened volatility, liquidity typically prevails and market participants are unlikely to appreciate the economic and corporate fundamentals that the region’s markets have to offer. This has introduced dislocations to Asian bond markets, creating potentially interesting opportunities for the astute investor.

Top of Mind Meditations in an Emergency (Wellington AM, Apr 2020)

Multi-Asset Strategist Adam Berger discusses the macro and market impact of the coronavirus and offers his "playbook" for the coming weeks and months, including thoughts on rebalancing and opportunistic investments.

House View Q2 2020: COVID-19 - A healthcare and economic crisis (Aviva Investors)

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

As a result of the COVID-19 pandemic, the near-term economic outlook will undoubtedly be weak. The only debate is how deep the decline in activity will be and how long it will take to recover. As ever, the House View captures how we see the world evolving over the next couple of years. In these highly uncertain times, we think it is more important than ever to ground our investment decisions in this framework and to communicate that view clearly with clients.

Uncommon truths: Are credit spreads wide enough? (Invesco, Apr 2020)

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

Have credit spreads widened enough? We think the answer depends upon what happens to the economy and we use US credit markets to give historical context. This leaves us more concerned about high-yield than investment-grade but we believe spreads could still widen in both.

When might the economy re-open? (LGIM blog, Apr 2020)

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

After several weeks of lockdown in Europe, this may even be beginning to feel normal. But we all know it is not normal, and if we are still working we should consider ourselves fortunate. The economic toll from the necessary restrictions on individuals and businesses will be immense.

Finding Opportunities in today’s tumultuous times (Invesco, Apr 2020)

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

PMs weigh in on business trends, balance sheets, disciplined approaches and Federal Reserve Policy.

Is Inflation Frozen Too? Should the Fed let it go? (BMO GAM, Feb 2020)

If the economy has been expanding for a decade, why isn’t inflation higher? BMO GAM investigates.

The Two Faces of Dislocation: Liquidity and solvency (MFS IM blog, Apr 2020)

The economic impact of the COVID-19 health crisis and the response of policymakers can be viewed through the lens of liquidity and solvency. For investors with a longer time horizon, market selloffs such as these provide investment opportunities for active managers. Assets are cheaper; valuations are favorable.

Global Outlook: The path to recovery-what's next? (Franklin Templeton, Apr 2020)

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

Looking at the economic and market outlook for 2020 just a few months ago, there’s no doubt times have changed. The spread of the coronavirus dealt a severe, unexpected shock that impacted people— and markets—around the globe. Many investors are wondering how to navigate the supply and demand shocks, and questioning, where do we go from here? While clearly the scope and reach of the coronavirus crisis is unprecedented, our senior investment leaders have plenty of experience navigating periods of uncertainty and volatility. They outline how they see a recovery taking shape once the crisis passes and offer some investment insights.

Preparing for the next U.S. recession (Capital Group ideas blog, Apr 2020)

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

When is the next U.S. recession?

Multi-Asset Market Outlook (Robeco, April 2020)

This monthly document by Robeco provides insights into the outlook for global equities, bonds, and foreign exchange. The authors also provide a brief regional economic analysis for the United States, Europe, Japan, and China.

Global Investment Views (Amundi AM, Apr 2020)

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

This monthly report by Amundi AM examines the overall risk sentiment for different assets.

Q2 2020 Outlook & Review (QMA)

QMA provides their thoughts on Q2 2020, the state of the global economy, escalating geopolitical risks, central bank policy rates, and more.

ABOUT THE AUTHOR

Andrew Perrins is a former Actuary and Asset Allocator. After qualifying as an Actuary, he worked for 15 years in investment management, serving as Director of Asset Allocation for Abbey Life and for Chase Manhattan, before setting out on a more entrepreneurial path.

To contact him, email andrew.perrins@savvyinvestor.net