While Global Growth Remains at Risk, Recession is Unlikely
Despite a shift in investor sentiment, global growth remains at risk. In the latest volume of quarterly outlooks, PGIM’s leading macroeconomic and investment experts share their insights on geopolitical risks, central bank dovishness, the potential rebound of the Chinese economy, and much more.
Brexit Developments: Deal or Delay
Despite shifting political dynamics and uncertainty about the sequencing of upcoming events, the base case remains that a hard Brexit will be avoided. That leaves two options as the likeliest scenarios: Prime Minister May’s deal or a longer extension of Article 50, which consequently results in a soft Brexit.
The Fed Squares the Dots—Markets Yet to be Convinced
Although the markets’ conviction that the Fed will be cutting rates grew after the March 20th FOMC meeting, markets may not be easily convinced that the economy is back on Easy Street. Instead, the markets are reacting as if we are in a late-cycle investment environment, which gets riskier for stocks as growth ebbs, but more positive for bonds as the rate cycle has presumably crested.
ECB—Surprisingly Dovish on Several Counts
The central bank surprised the market with a package that is designed to impress and stamp out skepticism that the ECB may be out of ammunition with policy rates already in much-criticized negative territory and having just stopped its bond purchases at year end.