Real global GDP-growth has already fallen to 2.8% in Q3 2018. A number of economic indicators are suggesting that this trend will continue. For example the flattening yield curve in the US indicates that market participants expect a slowdown in economic activity. Furthermore ther credit growth in China is falling. If the change in credit volume is below nominal economic growth, the momentum produced by credit is negative. This means that the credit environment in China is depressing economic activity. On the positive side: it is expected that the US central bank is turning more cautious. At this point, less than a full hike is priced in for 2019.
The suspension of further tariff increases by the USA on Chinese imports, the cautious statements from the US Fed, and the expansive fiscal policies are supporting the economy and the markets. Risks like a further escalation of the trade conflict, a further weakening of global economic growth (especially in China), and drastic rate hikes by the Fed due to higher inflation are dampening the upward potential of risky asset classes.
Development of bond yields of US- and EUR-Government-Bonds and EUR-Corporate-Bonds Investment-Grade (11/2013-11/2018)
Development of bond yields of European High-Yield-Bonds compared with global High-Yield-Bonds and Emerging-Markets-Corporate-Bonds (11/2013-11/2018)
The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.
Ratio-Overview (more information at www.erste-am.com)
Prognoses are no reliable indicator for future performance.