Global Factor Views

Macroeconomic and equity market backdrop

  • Growth: Re-opening and fiscal stimulus is driving faster-than-expected economic recovery in the US. In the first quarter of 2021, this resulted in rising inflation expectations and higher bond yields. Beyond the US, many economies remain focused on the coronavirus and the slow roll-out of vaccines has delayed recovery. There are, however, encouraging signs that this is gathering pace in the eurozone. Globally, we expect growth to rise by 5.5% in 2021 and 4.3% in 2022.
  • Rates: We expect upward pressure on real and nominal US bond yields to resume as rising headline inflation leads to inflationary concerns. However, we do not expect bond yields to rise substantially this year as the Federal Reserve seeks to carefully manage the recovery and avoid another ‘taper tantrum’.
  • Equity markets: The overall outlook remains positive for equities. Macroeconomic prospects appear to be strong, meaning the earnings recovery should stretch into 2022. Valuations in absolute terms are elevated but equities remain attractive compared to bonds, even under a scenario where yields move modestly higher.

With the above macro and market conditions as context, we update our outlook for equity market factors below.

Outlook for equity factors

Global factor performance : Last 6 months

Global factor performance : Last 3 months

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