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MACRO RESEARCH
December 2019

Global View – Outlook 2020


Foreword
GlobalView
The global manufacturing cycle appears to be bottoming out and we expect the recovery to strengthen into 2020. However, growth will probably remain moderate, so that central banks should maintain an easing bias and maintain accommodative liquidity conditions. We expect the strength of the US dollar to persist in 2020 on the back of superior economic fundamentals and carry advantage. Bond yields are likely to rise further. However, given that there has already been a significant upward adjustment from the lows, we would expect global bond yields to rise moderately. An upturn in the global business cycle would benefits EM assets. EM fixed income investors ought to rotate into high yield bonds and local currency markets with steep yield curves. Firming manufacturing indicators and favorable liquidity conditions should sustain further equity gains into Q1 2020. We advise overweighting cyclical markets, particularly the euro area and the UK. At the sector level, we favor sectors with a value or cyclical tilt, such as materials, industrials, automobile, banks and biotechnology.

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