Second Quarter 2019
Fidelity's Asset Allocation Research Team (AART) examines major themes in global financial markets and presents its investment outlook in this quarterly market update.
- During Q1, global growth remained positive but increasingly uneven, and many major economies have progressed toward more advanced stages of the business cycle; the U.S. is firmly in late cycle but with low near-term risk of recession.
- Despite the heightened uncertainty, global assets responded favorably to the U.S. Federal Reserve's shift away from its monetary tightening bias; U.S. equity markets led the way.
- Globally, government bond yields continued to decline; 10-year Treasury yields fell below 3-month Treasury yields, inverting the U.S. yield curve.
- Although we think global economic momentum has peaked, recent changes in policy stances in the U.S. and China are supportive of asset markets and of the business cycle overall.
- The mature global business cycle continues to warrant smaller cyclical allocation tilts and the prioritization of portfolio diversification; risks include monetary and trade policy uncertainty, as well as China's uncertain outlook and policy response.