Global Fixed Income Strategy Sep 2017

Monthly insights and updates from the Invesco Fixed Income team.

Sep 27, 2017 | Invesco Fixed Income

Investing in an uncertain environment

The current investing environment seems daunting. Markets have had a strong couple of years and valuations are tight. At the same time, risks abound. Geopolitical risks including North Korea, terrorism, Brexit and unpredictable politics in Europe and the US make for an uncomfortable investing environment. In such uncertain times, it is important to use an investing framework to help manage through the many risks in the markets, to remind us of the markets’ key driving forces and to help measure the impact of events or potential risks.

Our macro factor framework that we have discussed in this document in past months provides an understanding of how developments in growth, inflation and financial conditions globally are likely to impact markets. Currently, global growth is solid. US growth is now being supplemented by solid European and Japanese growth. Inflation is low and benign. We anticipate that central banks will begin to tighten financial conditions, but they will likely be cautious and the pace will be slow enough that overall financial conditions should remain easy. This view on growth, inflation and financial conditions should be supportive of all risky assets, including credit and equity. Until and unless we see a change in momentum in one of these three macro factors, markets should remain well-supported.

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