Does inflation travel?
Inflation has been a major driver behind financial market returns and we expect that to remain the case in the short term. Trade costs are a significant contributor to the final price of any good with shipping costs its most
Back to homepage
Posts From Invesco
2022 Midyear Investment Outlook
Much of the world continues to move past the COVID-19 pandemic, but its remarkable effects on economies and policies remain top of mind as a new set of uncertainties enters the picture. Historic pandemic-era moves by both fiscal and monetary
Cloudy with a chance of recession
The slump in global equities deepened in the second quarter of 2022 as concerns about a recession replaced fears of high inflation and an escalation of the war in Ukraine seemed less likely. The US Federal Reserve has maintained its
Global debt review 2022
Global debt ratios declined in 2021 on the back of the rebound in GDP. Falling bond yields dampened the rise in debt service ratios over recent years but that is now changing. We fear the corporate debt …
Global Asset Allocation 2022 Q3
Most assets have again delivered negative returns in both local currency and USD, with the notable exception of commodities (or more precisely energy and agricultural products). That was unfortunate for us, given that we were zero-weighted in commodities (having been
Why I like Chinese equities
Chinese equities have recently outperformed other regions (while bonds have done the reverse). We ask whether this is a dead-cat bounce or the start of a new trend. There are many worries about Chinese stocks but we suspect a lot
Have consumers returned to spending on services?
The COVID-19 pandemic increased the proportion that developed world consumers spend on goods versus services. This has been reflected in the outperformance of sectors focusing on the production and selling of goods. We think that consumer spending patterns will return
The Big Picture Global Asset Allocation 2022 Q2
The year started with central banks turning hawkish, followed by Russia’s invasion of Ukraine, both of which destabilised financial markets. Many cyclical assets are now cheaper than when we last wrote and we are adding to equities within our Model
The causes and course of inflation
Recent conversations with investors reveal a lot of confusion about what causes inflation and what the future path will be. We take a look at various explanations including a Malthusian view of longterm drivers, shorter-term views of more proximate drivers
A difficult balancing act
Global equities retreated in the first quarter of 2022 in the face of higher inflation and the war in Ukraine. The US Federal Reserve has become even more hawkish despite the increasing threat of a significant slowdown in economic growth.
Sectors in Fed cycles
The tragedy unfolding in the Ukraine has been the main focus for financial markets this week. The impact on global economic growth remains to be seen, but we believe that the US Federal Reserve will start tightening monetary policy by
The economic and market consequences of war
We put some numbers on the effect of Russia’s invasion of Ukraine. We guess it could reduce global GDP by 0.5%-1.0% (while boosting inflation) but policy support may dampen that effect. What a tragedy for the people of Ukraine. They
The spectre of rising rates and the technology sector
Equity markets started 2022 like someone running to catch a train. Investor sentiment has since turned ever more hawkish on interest rates as inflation showed no signs of moderating. The technology sector has been caught at the sharp end of
Why is gold misbehaving?
Gold has done amazingly well, considering the rise in US treasury yields. Geopolitical tensions and fears of inflation may be helping. But we suspect that without US recession it has further …
Fed tightening: we favour equities and short duration
The Fed has told us it will soon raise rates. History suggests equities and short duration bonds will outperform over the coming months. The late start to this tightening cycle may complicate matters. So now we know – the Fed has
Alternatives under the microscope
Some alternative assets performed very well in 2021, especially private equity and Bitcoin. But we think 2022 will be very different with less growth but lots of policy tightening. Hence we expect a convergence of returns but still favour cyclical
The Aristotle List: 10 improbable but possible outcomes for 2022
Uncommon truths It is time to forget central scenarios and think about improbable but possible outcomes. Market sentiment is now mixed (thanks to the Fed), so our list of surprises contains something for everybody (these hypothetical predictions are our views
2021 in review
The Covid pandemic again dominated our thoughts in 2021. Nevertheless, cyclical assets did well (though our list of 10 surprises had mixed results). We are more cautious about 2022. A year ago, we were hopeful that vaccines would allow strong
Is the sun setting on the outperformance of banks?
The economic recovery has been thrown into jeopardy by the emergence of the new Omicron variant of Covid-19. However, we think that it is unlikely to completely derail the cycle and should allow central banks to tighten monetary policy in
Could there be a shortage of oil?
Could a lack of upstream investment lead to a shortage of oil and higher prices? We think lower investment was due to falling prices and believe it is now reversing. We remain wary of oil.
Global Asset Allocation 2022 Outlook
Given our view that 2022 will be a year of transition and that asset class returns will converge, we adopt a more balanced approach within our Model Asset Allocation, though still maintain a preference for cyclical assets. We reduce the
Africa 2021 A continent of opportunity
We believe that Africa will be the economic and investment story of this century. However, it is a continent of 54 countries, each with its own potential, pitfalls and capacity to absorb different forms of investment. The aim of this document is
On corporate margins and inflation rates
The sharp rise in inflation rates across many economies driven by supply chain issues and labour shortages has been a major concern for investors as economies opened up after pandemicrelated lockdowns. Among other effects, this may have an impact on
A transitory change in correlation
Uncommon truths: Rising bond yields have recently been associated with falling equity prices (reversing the trend of this century). We think this is a temporary reversal and do not fear higher yields, unless caused by costpush inflation (we would then
The Big Picture Global Asset Allocation 2021 Q4
Despite another good three months for cyclical assets, we are sticking with them within our Model Asset Allocation. We make minimal changes, with a reduction in the allocation to highyield credit (to Underweight) and a corresponding increase to equities (going
Climate change revisited
A range of emission and temperature change scenarios are examined. It is clear that technology will be key in mitigating change. However, we think large-scale adaptation could benefit infrastructure, engineering, housing and …
021 Invesco Global Sovereign Asset Management Study
With Covid-19 top of mind, impacting both operations and investment strategies, the impact of the ongoing pandemic is the major theme running throughout. This includes an examination of adjustments made in response to the crisis and the impact on long-term
The end of the beginning?
Strategic Sector Selector The resilience of the rally in global equities was tested in the second quarter of 2021 by a resurgence of COVID-19 cases and more hawkish messages by the US Federal Reserve. However, markets continued to grind higher
Global debt review 2021
Global debt ratios increased by a record amount in 2020. Half was due to rising government debt and the biggest gains were in developed countries. Falling bond yields dampened the rise in debt service ratios but that may not last,
The Big Picture 2021 Q3
We believe this economic cycle is in its infancy and, despite valuation concerns, are sticking with a preference for cyclical assets within our Model Asset Allocation. We make minimal changes, with a small reduction in the allocation to commodities (to
Staying the course
Strategic Sector Selector Global equity markets posted strong returns in 2021 Q1 after a double-digit rise in the final quarter of last year despite a renewed rise in infection rates in Europe, South Asia and South America. We think the
What can stop Biotech?
The biotech sector has generated stellar returns since its inception and we view it as a strategic pillar of our model allocations. However, the growth advantage is not what it was and we fear the short-term effect of rising bond yields.
Hyper Real: An Overview of Global Blockchain Industry Trends
What is blockchain technology? Blockchain technology is an umbrella term covering a set of tools, methods, and processes for electronic recordkeeping between multiple participants. Blockchains are peer-to-peer (P2P) networks composed of different entities that collectively maintain and update a shared set of records.
Central banks in a pickle
Central banks in a pickle Uncommon truths We think tapering is off the agenda for 2021 and believe that central banks may purchase increasing amounts of assets. That may be good for risk assets this year but we worry where
2020 – the year of living dangerously
Uncommon truths 2020 – the year of living dangerously Our list of 10 surprises didn’t envisage the global pandemic that dominated 2020. Even so, we had some successes and cyclical assets did well. We expect that to continue in 2021,
The builder’s guide to Bitcoin
Uncommon truths Looking at global stock indices, you wouldn’t know there had been a global pandemic and recession during 2020. On the other hand, gold bears witness to the problems and Bitcoin has recently taken up the mantle. Applying our
Light at the end of the tunnel
The Big Picture – 2021 Outlook 2020 has seen defensive assets outperform cyclicals. We expect the opposite in 2021. Despite short term Covid-related risks, recent vaccine news provides valuable light at the end of the tunnel. Unfortunately, some cyclical assets have
Multi-sector asset allocation outlook – Q4 2020
Multi-sector asset allocation outlook – Q4 2020 IFI multi-sector asset allocation overview Macro factor summary: We have upgraded our growth expectations for the US and Europe and expect growth momentum to persist in 2021. We expect spare capacity to keep
Invesco Global Factor Investing Study 2020
Welcome to our fifth annual Global Factor Investing Study, based on an interview programme with 238 factor investors. This study incorporates the views of 138 institutional investors and 100 wholesale investors that are together responsible for managing over US$25.4 trillion
Finding the opportunity in ESG
ESG disclosures: the bedrock of the sustainable finance agenda At Invesco, we consider environmental, social and governance issues (ESG) not only as financially material considerations but a core part of long-term value creation. And we are not alone- asset managers
Does it matter who wins the US election?
Uncommon truths I have long expected Joe Biden to be elected as the next president of the US. I believe the stock market implications are less than many fear but not all sectors will be impacted in the same way.
What could the Fed’s new policy mean for investors?
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
Outlook for Fed Policy: Near- Term, Longer- Term
Global Fixed Income Strategy In November 2018, the US Federal Reserve (Fed) announced that it would conduct a broad review of its monetary policy framework. The new framework will likely shape monetary policy in …
Is China over-investing?
Uncommon truths China is often accused of over-investing and its capital productivity has fallen. However, marginal efficiency of capital is positive and return on equity is in the middle of the developed comparator range. We recently wrote that China’s economy
Sins of omission: managing omission risk in discretionary strategies
Persistent positive skew in the distribution of returns across index constituents suggests that a successful active equity management program must include a process to mitigate omission risk – i.e. the opportunity cost of missing out highreturning stocks that buoy average
How far from normal?
Uncommon truths Covid-19 has not gone away, shutdowns are being selectively reintroduced and we suspect the recovery becomes more difficult from here. We maintain a diversified model asset allocation. We have been living with Covid-19 for more than six months
2020 Long-Term Capital Market Assumptions Q3 update
Strategic Perspective. It is difficult to imagine that only three months ago we were writing about riding out the first global recession, record levels of unemployment and declines in earnings not seen during any of our lifetimes. This historic decline
US jobless claims and vaccine developments bring positive news
Last week, I laid out five things to watch in the month of August. Over the past seven days, we’ve seen new developments in each one. This week, I offer a quick update to each of those five issues, and
Fixed Income Asset Allocation Insights
Evaluating the four P's (Pandemic, Policy, Pricing and Portfolios) The first half of this year has been dominated by the spreading coronavirus pandemic and the policy response to it. The latter has been overwhelming; both monetary and fiscal policy are
Private equity is from Mars; hedge funds are from Venus
Uncommon truths What role can alternative assets play in our model asset allocation framework? We look at real estate, commodities, private equity, hedge funds, diamonds and fine wines. We think some are core assets, others tactical while some have no
FEATURED
