October Global Macro Monthly & Investment Strategy - Into the bleak, debt winter
- The pandemic is resurgent across many countries, with Europe re-emerging as a hotspot and cases rising again in the US. Social restrictions are rising across Europe again.
- Q3 looks likely to post a strong rebound across most economies. However, even before the close of Q3, momentum appeared to be fading.
- Fiscal authorities have in the main expanded policy to accommodate the return of the virus. However, UK policy is reduced and stalled stimulus discussions in the US have caused a hiatus here.
- Risks point to a softer Q4. The outlook for 2021 is falling globally and risks are skewed to further weakness.
- Equity markets face a clouded near-term outlook and positive earnings momentum has stalled. Credit sees some protection from central banks covering around one-third of IG credit.