2020 Outlook: Cautiously Constructive, Consciously Reactive

BNP Paribas
By January 13, 2020 17:56

2020 Outlook: Cautiously Constructive, Consciously Reactive

2019 turned out to be very different to what most market participants had expected at the turn of the year. This time last year, weakening data, escalating tension between the US and China and a seemingly agnostic Federal Reserve overtightening US monetary policy caused a large correction to risk assets in Q4 2018 and indeed left 2018 full-year returns in the red for equities, credit and commodity markets. Returns so far in 2019 have swung in the other direction: most major assets are in positive territory (Figure 2). Such crossasset positivity can be easily summarised in one common theme: a central bank engineered goldilocks environment. Indeed, the Fed’s ‘pivot’ early this year and the subsequent easing of US monetary policy, together with dovish turns by other leading central banks, has driven a strong bid for risky assets and safe havens alike. That said, flare-ups on the geopolitical front – notably continued Sino-US tension – threw a spanner in the works several times, making 2019 a ‘trader’s year’ rather than a ‘buy-and-hold year’, which overall YTD returns do not portray at first sight.

BNP Paribas
By January 13, 2020 17:56

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