In case you missed it—given the recent gyrations in Italy and financial markets—we published our Secular Outlook
in May. Difficulties in Argentina and Italy, and President Trump’s
imposition of tariffs on steel and aluminum imports from the EU, Canada
and Mexico, among other disruptions, are some recent examples of rude
awakenings for complacent financial markets. However, as we lay out in
more detail in the outlook, these events may only be a small precursor
of things to come over the secular horizon. Here are the key takeaways.
Following the three-day Secular Forum with distinguished external speakers and our Global Advisory Board, as well as our subsequent internal discussions, we concluded that we may be witnessing an important turning point: Ten years after the financial crisis, the global economy and financial markets look set to enter a new era of potentially radical change that will make the future look very different from the past.
The post-crisis environment has been characterized by financial repression through regulation; dominant central banks; mostly passive or restrictive fiscal policies; largely uninhibited trade and capital flows; subdued growth and inflation; and low volatility in the macro economy and markets. To be fair, the past decade had its fair share of rude awakenings, but whenever they came along, central banks were quick to step in and prop up markets and economies.
We expect a very different macro landscape to emerge over the next five years—for better or worse. Already, there are important shifts underway: The monetary-fiscal policy mix has been changing, with central banks retreating and fiscal policy becoming more expansionary; the regulatory discussion is moving from the financial to the tech sector; and economic nationalism and protectionism are on the rise. However, bigger disruptions may lie ahead. Here are five potential sources of major rude awakenings for investors over the secular horizon:
Read the full report at: Key Takeaways from PIMCO’s Secular Outlook: Rude Awakenings
Following the three-day Secular Forum with distinguished external speakers and our Global Advisory Board, as well as our subsequent internal discussions, we concluded that we may be witnessing an important turning point: Ten years after the financial crisis, the global economy and financial markets look set to enter a new era of potentially radical change that will make the future look very different from the past.
The post-crisis environment has been characterized by financial repression through regulation; dominant central banks; mostly passive or restrictive fiscal policies; largely uninhibited trade and capital flows; subdued growth and inflation; and low volatility in the macro economy and markets. To be fair, the past decade had its fair share of rude awakenings, but whenever they came along, central banks were quick to step in and prop up markets and economies.
We expect a very different macro landscape to emerge over the next five years—for better or worse. Already, there are important shifts underway: The monetary-fiscal policy mix has been changing, with central banks retreating and fiscal policy becoming more expansionary; the regulatory discussion is moving from the financial to the tech sector; and economic nationalism and protectionism are on the rise. However, bigger disruptions may lie ahead. Here are five potential sources of major rude awakenings for investors over the secular horizon:
Read the full report at: Key Takeaways from PIMCO’s Secular Outlook: Rude Awakenings
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