A stony path to normality

In Short

Global growth met a speed bump over summer, with new Covid worries and China’s regulatory clampdown still weighing on the outlook. Yet the recovery will not run off the rails. Policymakers will tread cautiously in removing accommodation, while low real yields and solid expansion remain positive for risky assets. We maintain a prudent pro-risk bias, but acknowledge a higher risk of setbacks at this stage of the cycle – with a particular attention to the US debt ceiling in the coming weeks.
Market Perspectives

Highlights:

  • Toppish data, rising Covid worries and China’s regulatory clampdown are weighing on the outlook.
  • Yet the recovery will not run off the rails and policy makers will tread cautiously in removing accommodation.
  • Low real yields and solid expansion still leave risky assets with legs, while rates will creep higher only sluggishly.
  • We maintain a prudent pro-risk bias, but acknowledge a higher risk of setbacks in the more mature phase of the cycle.

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