The sharp rebound in equities seen this year is beginning to look a little tired and markets were little changed amidst a downbeat set of forecasts from the IMF. While the IMF cuts its global growth forecast for 2019 and warned of downside risks, it is still projecting but with little conviction some recovery in growth 2020 – the infamous two-handed economist lives on.
“Trade remains a major focus for markets and the US-China negotiations appear albeit rather tortuously to continue to move in the right direction. An ‘awesome’ deal – well, that’s certainly how the US will describe it – is still looking on the cards for next month. However, just as frictions with China are diminishing, trade tensions between the US and EU are increasing. Both the US and EU have threatened to impose tariffs on each other in response to past subsidies to Airbus and Boeing. And the US still has to decide whether to go ahead with tariffs on auto imports on national security grounds of all things. Meanwhile, the minutes from the latest Fed meeting confirmed the Fed is very much on pause. With inflation running at close to target and growth slowing but not collapsing, there seems every reason for the Fed to sit on its hands for some time yet.