2018 Global Market Outlook
Running with the bulls
Our global team of investment strategists believes global growth momentum is likely to persist into 2018, pushing up equity markets over the first part of the year. Japan, Europe and emerging markets are likely to outperform the U.S. Similarly, the euro, Japanese yen, British pound and emerging market currencies may offer investors more potential upside in 2018 than the U.S. dollar.
The strategists also believe that the timing of the next U.S. recession will be a critical issue for the global economy in 2018. Further out, they see the risk of a recession in 2019 if additional policy tightening by the Fed causes the yield curve to become inverted. They believe the 10-year U.S. Treasury yield could rise towards its fair value before declining in the latter half of 2018 as recession fears grow.
In contrast to the U.S., the eurozone is amid a mid-cycle renaissance and at the early stage of its exit from a very loose monetary policy, which the strategists believe may keep core eurozone bond rates rangebound through 2018. They also expect another strong year for the Asia Pacific region, buoyed by an accommodative policy at the Bank of Japan, although re-emergent wage and price inflation may cause the Reserve Bank of Australia to raise rates twice in 2018.
Key global market outlook highlights include:
- U.S. equities could push higher before facing headwinds later in 2018
- Three U.S. Federal Reserve rate hikes expected
- Recession fears likely to rise as U.S. yield curve continues to flatten
- Europe, Japan and emerging markets expected to outperform U.S.
Russell Investments releases its Global Market Outlook on a quarterly basis. The Outlook highlights the most recent economic insights and market expectations from the firm's global team of investment strategists. It is the most widely read of Russell Investments' publications.
SENIOR INVESTMENT STRATEGIST, EMEA
INVESTMENT STRATEGY ANALYST
Stephen Wood, Ph.D.
CHIEF MARKET STRATEGIST