2020-21 likely to be much less rewarding than 2019

We think that returns from “risky” assets – equities, corporate bonds, REITs and industrial commodities – will generally beat those from “safe” ones – government bonds and precious metals – again over the next two years, as the global economy finds its feet. However, in our view both will be weaker than in 2019. We doubt that central banks will spring a major dovish surprise like the one that fuelled this year’s rally. Despite recent progress on trade talks between the US and China, we think that most of their differences will remain unresolved. And the recovery in global GDP growth is likely to be lacklustre, with China missing out. Finally, though not our central forecast, a Sanders or Warren victory in the US election is a significant risk to equities there in particular.