With valuations high, where can investors find equity opportunities? Invesco Perpetual’s Chief Investment Officer Nick Mustoe believes a shift in fiscal policy could have profound implications for the bond markets in his 2017 outlook.
The prospects for 2017 are likely to be heavily informed by what we have seen in the years since the financial crisis. Since 2008/2009, economic policy has focused almost exclusively on austerity measures and loose monetary conditions, such as ultra-low (and even negative) interest rates and quantitative easing programmes. These measures were intended to slow the growth of debt relative to gross domestic product, to lower risk free interest rates and stimulate economic activity. Whilst they have been successful to the extent that they have averted a 1929-style depression and a collapse of the banking system, they have been largely ineffective in engendering significant growth in the real economy.