The Forward View – Global: November 2016
US election highlights social and economic tensions
US election hanging over global markets
- The US Presidential election campaign ends today and the outcome may finally lift some of the uncertainty that has hung over global markets in recent months. Much depends on the victor winning a clear mandate and not facing a continuation of policy gridlock because they are unable to get their legislation through a hostile Congress.
- The upturn in global output has continued at a moderate pace through numerous shocks and growth scares – the Euro-zone’s worries, Brexit, Chinese market volatility to name just three – highlighting the underlying resilience of demand in the big emerging market economies of China and India and the ability of advanced economy central banks to keep the show on the road by means of historically low policy interest rates and asset buying aimed at cutting longer term bond yields.
- Central banks in the big advanced economies may well have now eased their policy by as much as they want to with US attention focussed on the profile of Fed rate rises, the Bank of England moving away from its rate cutting bias, the ECB about to consider if it will cut back its asset purchases next year. Partly as a result global bond yields are off their lows. We expect global interest rates to remain very low through the next few years as central banks seek to get inflation up to target rates.
See the full report for details: