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Opportunities Beyond Secular Stagnation

Outlook 2017 by Laurence Boone, Head Of Research & Investment Strategy at AXA IM

2016 marked something of a turn-around in investors’ attitudes towards the economic and financial outlook. Looking ahead into 2017, we believe that fears over secular stagnation are overdone and challenge the prevailing idea that such a backdrop will dominate investment returns going forward.

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2017 Outlook: Can insurers find greener investment pastures?

Mathilde Sauvé, Head of Institutional Solutions at AXA IM

Political risk dominate developed markets in 2016 with Brexit and Trump– with far reaching and yet-to-be defined consequences on many fronts. In our view, cautious optimism is warranted for insurance companies. Combining insights from across AXA Investment Managers, we have highlighted factors that we feel will influence returns, valuations and deficits for insurance companies. Going into 2017, we are convinced that it is essential for insurers to implement investment strategies that will help them both future-proof their portfolios for these longer-term developments and to navigate shorter-term headwinds.

  • We believe that within the next five years risk premia will normalise at the short end of the curve towards their long-term levels offering increased investment opportunities for insurers
  • In the near term, however, uncertainty, low rates, regulatory and operational pressures will cloud the horizon in 2017
  • For insurers, diversifying credit exposures, managing the equity downside alongside capital charges, and considering integrated solutions, make sense


Politically, 2016 saw the beginning of a journey from surprises to greater uncertainty, and finally another ‘new normal’. This uncertainty will extend into 2017 in many countries. In the UK, the exact shape of Brexit and the eventual impact on insurance regulation are yet to be seen. In Italy, it is difficult to predict the speed at which banking sector issues will be solved. France and Germany, amongst others, will hold elections, and though populist movements are unlikely to win, they may well have an impact on mainstream policy. In the US, increased infrastructure spending could, result in higher inflation expectations, and higher rates. However, expectations are mitigated by uncertainty around the Trump administration’s policies.

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2017 Inflation Outlook: Inflation should normalise while risks shift firmly to the upside

By Jonathan Baltora – AXA WF Global Inflation Bonds fund portfolio manager

2016 was pivotal in lifting inflation expectations, bucking deflation fears earlier in the year. Inflation should continue to normalise in 2017, while headline inflation will converge with core inflation.

  • We see inflation risks shifting from the downside to the upside under the influence of multiple themes from the Trump presidency policies, the OPEC deal on production cuts, rising producer prices in China and the impact of Brexit.
  • We currently see opportunities in inflation breakevens and short duration inflation linked bonds. We expect inflation breakevens to remain supported in the coming months as  headline inflation is set to accelerate further but we would have a preference for short duration inflation linked bonds over the longer term.


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VIDEO : "There are the French primaries, a presidential programme and the implementation"

By Laurence Boone, Chief Economist & Head of Research and Investment Strategy

Watch the video in French





US outlook 2017

By David Page, Senior Economist (US and UK)  - AXA IM

The election of Donald Trump as 45th President of the US looks likely to have a material impact on the outlook for US activity over the coming years. While acknowledging the significant policy uncertainty, David Page reviews the expected outlook for 2017.

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Video by Laurence Boone, Chief Economist & Head of Research and Investment Strategy.

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Why rates are going to rise, or why secular stagnation is an over-rated concept

by Laurence Boone, Chief Economist & Head of Research and Investment Strategy

My conviction as AXA Chief Economist is that 2016 was the year marking the end of the fear of even lower interest rates, and a new hope of a progressive rise of rates, even if not to the past prevailing pre-crisis levels. Secular stagnation (the prolonged period of low interest rates and low growth) is an over-rated concept!

We argue that growth and inflation are back.

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2017 Outlook: Higher interest rates and growth set to return

by AXA IM’s Research & Investment Strategy & colleagues

2016 marked something of a shift in investors’ attitudes towards the economic and financial outlook. Looking ahead into 2017, we believe that the prevailing fears over secular stagnation – this prolonged period of low interest rates and low growth - are now overdone.

Ultimately, going forward, we feel this backdrop will improve, as will investment returns.

While recent years have certainly been characterised by low growth, this does not mean it is the global economy’s fate. In fact the favourable combination of policies,  technological progress and demographics should together offset and eventually reverse this trend.

As such we believe this is positive from an investment perspective. Opportunities will return once risk premia have moved back towards more normal long-term levels - and we expect the latter to happen within five years. In the meantime we believe that active management, investment into alternative asset classes like real estate and even emerging markets (EM) - provided the US refrains from implementing punitive trade policies - will help investors.

Below we highlight 8 trends to watch out for in 2017 and beyond