QSO - July 2017
The global economy remains on track this year for its highest GDP growth rate since 2011. Reflecting the cyclical improvement in economic growth, many central banks have become more hawkish recently, getting ready to either wind back their easing or start raising interest rates. The US is furthest through the monetary policy normalisation process. While the outlook there has become less certain following a number of lower than expected inflation results, we expect the Fed to continue on with gradual withdrawal of monetary stimulus.
Improving economic growth around the world will generally support equities and challenge bonds. That’s because this growth is more ‘traditional’ in nature, arising from better employment and demand, and thus allowing prices (and potentially profits) to rise. However, it is important not to chase well-developed market rallies, even when immediate risks are not apparent.
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Important notes
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This article has been prepared to provide general information and does not constitute 'financial advice' for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.