Nov 19, 2020 Forecasts

Our forecasts

In light of the very dynamic market environment these forecasts are subject to change at any time.

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Macro

Cautiously optimistic

GDP growth (in %, year-on-year) 2020F 2021F
United States -4.4   4.0
Eurozone -8.5   5.5
United Kingdom -10.0   4.5
Japan -5.5   3.0
China 2.2   8.2
World -4.3   5.2
Fiscal deficit (in % of GDP) 2020F 2021F
United States 18.0   15.0
Eurozone 9.7   6.0
United Kingdom 18.0   8.0
Japan 14.0   6.0
China 11.9   11.8
Consumer price inflation (in %, year-on-year) 2020F 2021F
United States[1] 1.6   1.8
Eurozone 0.3   1.0
United Kingdom 0.9   1.5
Japan 0.0   0.2
China 2.9   2.0
Current-account balance (in % of GDP) 2020F 2021F
United States -2.5   -2.5
Eurozone 3.4   3.0
United Kingdom -2.8   -4.0
Japan 3.6   3.2
China 1.5   1.2
Benchmark rates (in %) Current[2] Dec 2021F
United States 0.00-0.25   0.00-0.25
Eurozone -0.50   -0.50
United Kingdom 0.10   0.10
Japan 0.00   0.00
China 3.85   3.55
Commodities (in dollars) Current[2] Dec 2021F
Crude oil (WTI 12M forward) 41.1   49
Gold 1,877   2,100
Copper (LME) 6,934   6,950

Equities

Low interest rates, higher valuations

Current[3] Dec 2021F Forecast Total Return (exp.)[4]

Expected earnings growth

P/E impact

Dividend yield

United States
(S&P 500)

3,537
 
3,800 9.2% 31% -23% 1.7%

Europe
(Stoxx Europe 600)

385
 
400 6.7% 26% -22% 2.9%

Eurozone
(Euro Stoxx 50)

3,428
 
3,500 4.9% 25% -23% 2.8%

Germany
(DAX)[5]

13,053
 
14,000 7.3% 25% -20% 2.7%

United Kingdom
(FTSE 100)

6,339


 

6,400 4.8% 25% -24% 3.9%

Switzerland
(Swiss Market Index)

10,496


 

10,900 6.8% 13% -9% 3.0%

Japan
(MSCI Japan Index)

1,050
 
1,100 6.6% 25% -20% 1.9%

MSCI Emerging Markets Index
(USD)

1,182
 
1,280 10.6% 28% -20% 2.3%

MSCI AC Asia ex Japan Index
(USD)

778


 

850 11.5% 24% -15% 2.2%

F refers to DWS Investment GmbH forecasts as of 11/12/20

Fixed Income

Credit to remain supported

Current[2] Dec 2021F

United States

U.S. Treasuries (10-year) 0.88%   1.00%
U.S. municipal bonds[6] 96%   90%
U.S. investment-grade corporates 109 bp   90 bp
U.S. high-yield corporates 435 bp   370 bp
Securitized: mortgage-backed securities[7] 49 bp   45 bp
Europe
German Bunds (10-year) -0.54%   -0.50%
UK Gilts (10-year) 0.35%   0.30%
Euro investment-grade corporates[8] 107 bp   85 bp
Euro high-yield corporates[8] 414 bp   380 bp
Securitized: covered bonds[8] 34 bp   40 bp
Italy (10-year)[8] 122 bp   120 bp
Asia-Pacific
Japanese government bonds (10-year) 0.03%   0.00%
Asia credit 311 bp   300 bp
Global
Emerging-market sovereigns 380 bp   350 bp
Emerging-market credit 358 bp   320 bp

Currencies

Current[2] Dec 2021F
EUR vs. USD 1.18   1.15
USD vs. JPY 105   105
EUR vs. GBP 0.90   0.90
GBP vs. USD 1.31   1.27
USD vs. CNY 6.61   6.80


F refers to DWS Investment GmbH forecasts as of 11/12/20
WTI = West Texas Intermediate
LME = London Metal Exchange
bp = basis points

Legend:

  • Macro data exchange rates and alternative investments: The arrows signal whether we expect to see an upward trend  , a sideways trend  or a downward trend  .
  • The signals' colors illustrate the return opportunities for long-only investors:  positive return potential for long-only investors.  limited return opportunity as well as downside risk.  negative return potential for long-only investors.

Performance over the past 5 years (12-month periods)


10/15 - 10/16 10/16 - 10/17 10/17 - 10/18 10/18 - 10/19 10/19 - 10/20
Asia credit 7.8% 3.4% -2.5% 12.6% 5.0%
Dax -1.7% 24.0% -13.5% 12.4% -10.2%
Emerging-market sovereigns 11.6% 5.9% -5.3% 13.7% 2.0%
Emerging-markets credit 9.9% 6.5% -1.9% 13.0% 4.9%
Euro high-yield corporates 7.1% 7.8% -1.3% 5.2% -0.2%
Euro investment-grade corporates 5.1% 2.3% -1.2% 6.1% 1.2%
Euro securitized: covered bonds 2.7% -0.1% -0.2% 3.8% 1.3%
Euro Stoxx 50 -8.0% 23.3% -10.6% 15.9% -16.2%
FTSE 100 13.8% 12.1% -0.9% 6.4% -20.4%
German Bunds (10-year) 3.8% -0.3% 0.8% 6.2% 1.6%
Italy (10-year) 1.9% 1.9% -8.3% 22.3% 3.9%
Japanese government bonds (10-year) 3.0% -0.8% 0.0% 2.5% -1.3%
MSCI AC Asia ex Japan Index 6.6% 30.4% -13.6% 13.2% 15.9%
MSCI Emerging Market Index 9.3% 26.5% -12.5% 11.9% 8.3%
MSCI Japan Index 3.2% 17.8% -3.6% 9.2% 0.3%
S&P 500 4.5% 23.6% 7.3% 14.3% 9.7%
Stoxx Europe 600 -6.2% 20.6% -5.2% 14.0% -11.4%
Swiss Market Index -9.2% 22.0% 1.0% 17.1% -3.0%
U.S. high-yield corporates 10.1% 8.9% 1.0% 8.4% 3.5%
U.S. investment-grade corporates 6.9% 3.2% -2.8% 14.9% 6.7%
U.S. securitized: mortgage-backed securities 3.3% 0.5% -1.5% 8.9% 3.9%
U.S. Treasuries (10-years) 4.6% -1.8% -3.2% 14.6% 8.5%
UK Gilts (10-years) 7.2% 1.1% 1.2% 7.9% 3.2%


Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 10/31/20
Past performance is not indicative of future returns. Forecasts are based on assumptions, estimates, opinions and hypothetical models that may prove to be incorrect.

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1. core rate, personal consumption expenditure Dec/Dec in % (no average as for the other figures)

2. Source: Bloomberg Finance L.P. as of 11/12/20

3. Sources: Bloomberg Finance L.P., FactSet Research Systems Inc. as of 11/12/20

4. Expected total return includes interest, dividends and capital gains where applicable. Dividends are not guaranteed. The amount of dividend payments can change or not take place at all.

5. Total-return index (includes dividends)

6. Ratio of 10-year AAA Municipal yield to 10-year U.S. Treasuries yield

7. Bloomberg Barclays MBS Forward Index

8. Spread over German Bunds

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