Market Update – August 2019
The outlook for global growth has not improved. With interest rates globally already very low or negative, there is a limit to how much monetary policy can do, and the prolonged period of uncertainty over trade, a significant inventory-build globally in the first half of the year, declining growth in business investment in addition to the seemingly never-ending Brexit saga creates significant headwinds to the chances of that second half revival. Global PMI indicators continue to suggest weakness in the months ahead, as do flat yield curves, with bond markets pricing a very pessimistic outcome for global growth and global inflation. We have been saying for some months that if Brexit can at the very least be resolved in a positive way and a trade deal between China and the US concluded this would no doubt be a positive for the global economic outlook. The former appears to have taken a turn for the worse, not better over the last month, whilst the latter is showing no significant progress.