The article above is Aon's latest quarterly investment outlook for Canadian markets in January 2020. Download the article above to learn more.
- The strength in both risky and safe asset prices last year reflected a large easing in monetary conditions as central banks cut interest rates sharply and grew balance sheets once again. The Bank of Canada was an outlier but may join the monetary easing party soon.
- Fears for the global economy have eased, Coronavirus notwithstanding, but we should keep perspective. Trade uncertainty remains and the limited interest rate cuts that were possible spell only a modest economic rebound.
- The ‘lower for very much longer’ interest rate environment looks to be more deeply embedded than ever.
- Credit spreads are again on the wrong side of our fair values. With yields on corporate bonds now low, the margin for comfort on returns is thin. We suggest some coping strategies.
- The secret sauce of the bull market, record high profit margins in the U.S., is not going to be as supportive of markets looking ahead.
- Central bank actions have brought a respite for markets but it is still just a matter of time before unsettled conditions return. Portfolio actions need to remain focused on higher market risk and lower returns that will likely follow this period of strength.
1 Indices cannot be invested in directly. Unmanaged index returns assume reinvestment of any and all distributions and do not reflect fees or expenses. Please see appendix for index definitions. Past performance is no guarantee of future results
Market data source Factset
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