Multi-asset markets outlook

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February 2019

It was a sort of ‘game of chicken’ between the markets and the Fed. From October onwards, markets gave a strong signal to the US central bank that they disagreed with the more hawkish tone the Fed had adopted. While the Fed tried to soften its stance, it took until January until it finally capitulated. The Fed is back in data-dependent mode, and for now it means we at least have a pause in this rate hike cycle. And that’s also good news for emerging markets, which outperformed developed markets last month. It looks like tension between the US and China is easing as trade talks have resumed. Europe is the region where worries remain as the Brexit saga drags on and economic growth keeps disappointing, notably in Germany and Italy.