Financial markets look more buoyant than in the closing weeks of 2018. High levels of market volatility have been tamed by central bank moderation, with equity indices having had a roaring start of the year. However, looking beyond immediate market sentiment, how much has really changed?
 

In our latest CIO Insights publication we update our six key investment themes for this year in light of economic and market developments so far in 2019. They can be summarised as follows:

Six themes update
Growth deceleration
Theme 1: Economy

Growth deceleration

Financial markets look more buoyant now than in the closing weeks of 2018, but growth deceleration still looks highly relevant, with governments and other official bodies revising down forecasts for 2019. Growth divergence also remains an important issue.

Vigilant on volatility
Theme 2: Capital markets

Vigilant on volatility

Market gains have been helped by monetary authorities anticipating our second theme: “Capital markets – Vigilant on volatility”. A Fed go-slow on rate rises and other central bank promises to keep monetary policy accommodative have helped calm market nerves.

U.S. yields on the return
Theme 3: Fixed income

U.S. yields on the return

Growth worries and shifting expectations on central bank policy put a dampener on core government bond yields early in the year, although economic optimism is now pushing them up, as foreseen in our third theme. We also consider the credit space more broadly.

Earnings ease
Theme 4: Equities

Earnings ease

The focus seems likely to turn back to this theme when Q2 earnings reporting starts in a few weeks. Corporate earnings growth expectations are already being revised down around the world and we expect that there is further to go here.

 U.S. dollar and oil centre-stage
Theme 5: FX & commodities

U.S. dollar and oil centre-stage

Recent oil price gains have kept market attention on the second part of our fifth theme. But FX is under the spotlight: so far, the lack of further sharp U.S. dollar appreciation has removed one source of pressure on the emerging markets.

Long-term investment – Tech transition
Theme 6

Long-term investment – Tech transition

Our long-term theme remains very interesting, not least because of its important role in the U.S./China trade dispute. But, beyond the political headlines, sectoral evolution and transition continues apace, with 5G and medtech among the areas in focus.

 

The report “Establishing a new altitude – Investing beyond the peaks” has additional sections on multi-asset and liquid alternatives investing. It also includes our current macroeconomic forecasts for 2019 and 2020, as well as our 12-month market forecasts. 

The following regional editions of the full report are available for download:

CIO Insights – Establishing a new altitude – Investing beyond the peaks (Europe EN)

 

CIO Insights – Establishing a new altitude – Investing beyond the peaks (Americas EN)

 

CIO Insights – Establishing a new altitude – Investing beyond the peaks (Emerging Markets EN)

In the EMEA region this material is considered marketing material, but this is not the case in the U.S. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Investments come with risk. The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk. CIO Office, Deutsche Bank Wealth Management, Deutsche Bank AG - Email: WM.CIO-Office@db.com.

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