Markets continue to price in a Goldilocks environment with equities making further gains. More stable, but generally moderate growth, contained inflation and dovish central banks underpin this environment.
But this remains a ‘fragile’ Goldilocks. Two plausible scenarios could cause disruption: a global economic slowdown – this would hurt equities, but support government bonds – and an overheating US economy, forcing the Federal Reserve to resume tightening and likely causing both bonds and equities to suffer.
In their latest outlook, our two analysts present their expectations for the coming months.