Market perspectives: July 2020
29 June 2020 | Markets and economy
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.
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.
To download the full report, please click here.
* This monthly report represents the Vanguard house view as of 16 June 2020.
The contents of this document and any attachments/links contained in this document are for general information only and are not advice. The information does not take into account your specific investment objectives, financial situation and individual needs and is not designed as a substitute for professional advice. You should seek independent professional advice regarding the suitability of an investment product, taking into account your specific investment objectives, financial situation and individual needs before making an investment.
The contents of this document and any attachments/links contained in this document have been prepared in good faith. Please note that the information may have become outdated since its publication, and any information sourced from third parties is not necessarily endorsed by The Vanguard Group, Inc., and all of its subsidiaries and affiliates (collectively, the “Vanguard Entities”).
This document contains links to materials which may have been prepared in the United States and which may have been commissioned by the Vanguard Entities. They are for your information and reference only and they may not represent our views. The materials may include incidental references to products issued by the Vanguard Entities.
The information contained in this document does not constitute an offer or solicitation and may not be treated as an offer or solicitation in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The Vanguard Entities may be unable to facilitate investment for you in any products which may be offered by the Vanguard Group, Inc.
No part of this document or any attachments/links contained in this document may be reproduced in any form, or referred to in any other publication, without express written consent from the Vanguard Entities. Any attachments and any information in the links contained in this document may not be detached from this document and/or be separately made available for distribution.
This document is being made available in Hong Kong by Vanguard Investments Hong Kong Limited (CE No. : AYT820) (“Vanguard Hong Kong”). Vanguard Hong Kong is licensed with the Securities and Futures Commission (“SFC”). The contents of this document have not been reviewed by the Securities and Futures Commission in Hong Kong. Investment involves risk. Past performance is not indicative of future results. Investors are advised to consider their own investment objectives and circumstances. If you are in any doubt, you should seek professional advice.
Copyright, trademark and other forms of proprietary rights protect the contents of this document. You may not copy, publish and/or distribute any derivative works from the information from this document.