Global Equity Prices Should Trend Unevenly Higher
Many investors remain uneasy about the global macro backdrop, despite accelerating global economic growth, low inflation, accommodative global monetary policy and solid corporate earnings. Concerns about possible recession and deflation remain, and many investors are continuing a flight to quality, which is causing global bond yields to remain at exceptionally low levels. At the same time, disappointing U.S. economic data and mounting concerns over political instability in Washington, D.C. have held back equity prices and the value of the U.S. dollar.
Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF.
Key Points:
- Investors remain uneasy about global macro conditions, but we believe the backdrop remains supportive for equities.
- We believe U.S. economic growth should rebound in the second quarter and corporate earnings will remain solid.
- We may be seeing a transition in global equity leadership from the United States to Europe and select emerging markets.
Fed asset sales will likely put modest upward pressure on bond yields. If and when the Fed begins unwinding the bond purchases it made as part of its quantitative easing programs, it is likely to do so slowly and orderly. Nevertheless, those sales will likely add to upward pressure on interest rates.
Wages will likely rise over the coming years. Although unemployment stands at a decade-low 4.4%, we have yet to see significant upward pressure on wages. We doubt this situation can continue: With the economy at full employment, wages are likely to rise.
Download Nuveen Asset Management's latest commentary, or read a previous post from Nuveen called Where to Find Value in 2017.
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