Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
What to expect in 2020?
Peter Garnry
Chief Investment Strategist
Summary: The inflation trade is hot right now and this could be a major surprise for equities later this year. But our key convictions this year are that Italian equities will be one of the best equity markets, health care sector will underperform, 5G related stocks will outperform, IPO stocks will outperform in major comeback, a major acquisition in online streaming, sports athletics stocks will outperform, European and EM equities will outperform US equities, massive accounting fraud scandal in Asia, "climate" stocks will explode higher and electric vehicles will have their major breakthrough with Tesla surprising everyone.
The new year is off to a hectic start with tonight’s US attack on Iran’s top military leader raising the stakes in the proxy war between Washington and Tehran. Risk-off has accelerated in the last couple of hours with oil prices higher due to geopolitical risk premium and bonds being bid. But most interestingly is the move in gold up 6% since early December on rising central bank easing expectations and lower real rates. The US attack feeds the “inflation trade” that is clearly in action among large institutional investors. Yesterday, was one of the biggest days in terms of divergence between inflation-linked and nominal bonds indicating that investors are positioning themselves for an inflation surprise this year.
This is a serious risk factor for equities as historically equities decline either due to a recession or sustained inflation lasting over a year; equities actually rise during an initial inflation shock. Rising inflation would be mean higher nominal rates unless real rates go further into negative. If rates rise on inflation then this will have implications for growth vs value stocks and general equity valuation levels. But there are other important factors to watch in 2020 for equity investors. Everywhere you look predictions for 2020 are being published and of course you should not miss our predictions.
So what are our views and predictions on equities for 2020?
Italian equities will be one of the best performing equity markets in the MSCI World Index in 2020 driven by significantly higher equity valuations as earnings growth kicks into gear and Italian banks are lifted due to the success of the ECB’s tiering system on deposits. Italian equities have an attractive 4.1% dividend yield and is valued at a 35% discount to global equities providing meaningful catalysts for good performance in 2020 after being up 30% in 2019.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer