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Market perspectives: July 2020

29 June 2020 | Markets and economy

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In this latest Market Perspectives issue, we highlight the Vanguard house view on a number of current macroeconomic and market topics including monetary policy, economic growth, currencies, trade, asset returns and more.

Key highlights for this month*

  • U.S. growth will turn positive in the third quarter, but significant risks to the economy remain.
  • Vanguard expects that the U.S. unemployment rate will fall to around 10% by year’s end.
  • Continuing U.S.-China tensions are likely to accelerate the regionalization of supply chains.
  • China’s return to growth may happen as soon as the second quarter, with a full-year outlook for growth in a range of 1% to 3%.
  • The euro area economy may contract by as much as –20% before the economy begins to recover in the second half of the year.

Asset class return outlooks

Our ten-year annualized nominal return projections, as of March 31, 2020, are shown below. Please note that the figures are based on a 1.0-point range around the 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the 50th percentile for fixed income.

Asset class return outlooks

Notes: These probabilistic return assumptions depend on current market conditions and, as such, may change over time. The projections and other information generated by the Vanguard Capital Markets Model® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of March 31, 2020. Results from the model may vary with each use and over time. Source: Vanguard Investment Strategy Group.

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* This monthly report represents the Vanguard house view as of 16 June 2020.



 

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