Between imbalance, instability and improvement: global outlook

lowenthal-stefan

Stefan Löwenthal

  • Chief Investment Officer — Global Multi Asset Team
  • Read bio
wurzer-juergen

Jürgen Wurzer

  • Deputy Head of Portfolio Management, Senior Investment Manager — Global Multi Asset Team
  • Read bio

Imbalance and instability often have a negative impact on capital market structure and can lead to volatility and fragility. Nevertheless, the build-up of imbalances, and ultimately instability, tends to occur naturally over the course of an economic cycle, and in the late stages may be seen just before a recession kicks in. In their quarterly macroeconomic outlook, “Between imbalance, instability and improvement,” the Global Multi-Asset team examines this phenomenon in the current environment, looking at aspects such as negative interest rates and divergent budget paths in some major economies.

Read the paper

[974464]

The views expressed represent the Manager's assessment of the market environment as of October 2019, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.

IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

International investments entail risks including fluctuation in currency values, differences in accounting principles, or economic or political instability. Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility, lower trading volume, and higher risk of market closures. In many emerging markets, there is substantially less publicly available information and the available information may be incomplete or misleading. Legal claims are generally more difficult to pursue.

Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on its debt. Fixed income securities may also be subject to prepayment risk, the risk that the principal of a bond that is held by a portfolio will be prepaid prior to maturity, at the time when interest rates are lower than what the bond was paying. A portfolio may then have to reinvest that money at a lower interest rate.