September 2018 Quarterly Economic Update

September 2018 Quarterly Economic Update

The world economy is still growing, which is a generally positive background for risk assets, but investment outcomes have become overdependent on ongoing gains from U.S. equities. The most likely outlook is ongoing global expansion, though trade wars, monetary policy mistakes, problems in some emerging markets, and geopolitical shocks are all real risks to monitor. Bond yields in the U.S. have headed higher and have contributed to weak performance by global fixed interest and by global income-oriented assets like property and infrastructure; Australasian property markets, however, have been performing rather better. In the Australian economy, it looks as if the pace of business activity may be moving into a slightly higher gear, although the ongoing drag of the financials sector remains a concern for equity performance.