Q2 2018 MARKET OUTLOOKS

Against the backdrop of continued growth in the global economy, heightened trade tensions, and other prevalent market concerns, a new element of caution arises for investors. PGIM’s investment managers provide diverse outlooks from the perspective of their portfolio managers in fixed income and equities.

2nd Quarter Outlook

In addition to PGIM Fixed Income's Sector Outlooks, this edition of the Market Outlook features perspectives by Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds and Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research.

  • In Air Pockets at Cruising Speed—Welcome to QT, Robert Tipp examines some prevalent market concerns, including quantitative tightening (QT), and provides some perspective on how investors might consider these issues after Q1’s volatility.
  • The Global Economy at Cruising Velocity, by Nathan Sheets, explains how the balance in global fundamentals served as a stabilizing factor during the recent market turbulence. Sheets also looks at how U.S. fiscal policy, heightened trade tensions, and recent developments in China might affect conditions going forward.
  • In addition, PGIM Fixed Income provides answers to client inquiries on how the market will react to the release of the new SOFR rate—the proposed successor to LIBOR.
QMA

Q2 2018 Outlook & Review

Investors likely won’t need to lower their expectations for stocks too much this year but should be prepared for an even bumpier ride than QMA expected just a few short months ago. In this Q2 Outlook and Review, QMA's Global Multi-Asset Solutions group revisits their yearly asset class projections for the first time, since President Trump’s protectionist trade policies began rattling markets in early March.

While rising trade tensions are bound to fuel higher volatility, QMA thinks a full-blown trade war remains unlikely. Despite a noticeable move in interest rates, inflation pressures also seem contained. And experts still expect the US economy to grow by 2.5-3% this year. All of this suggests that, while the odds of a second straight year of 20+% gains have dropped, the probability-weighted return for US stocks is still just slightly lower than their early January projection of 10%.

Hold on to your hats.