Our forecasts

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

Due to these extremely volatile times, we saw the need to update our forecasts in-between our regular quarterly meetings. Our CIO Flash provides the rationale.

Macro | Viral uncertainty

GDP growth (in %, year-on-year) 2020F 2021F
United States -5.7   5.6
Eurozone -7.5   4.5
United Kingdom -8.0   6.5
Japan -5.5   3.3
China 1.0   9.0
World -2.6   5.4
Fiscal deficit (in % of GDP) 2020F 2021F
United States 18.0   4.9
Eurozone 7.5   3.6
United Kingdom 8.5   4.6
Japan 7.0   2.8
China 11.2   9.6
Consumer price inflation (in %, year-on-year) 2020F 2021F
United States[1] 1.2   2.1
Eurozone -0.3   1.0
United Kingdom 0.9   1.8
Japan 0.3   0.4
China 2.8   1.8
Current-account balance (in % of GDP) 2020F 2021F
United States -2.1   -2.3
Eurozone 2.6   2.7
United Kingdom -3.8   -4.5
Japan 2.5   3.0
China 0.4   1.0
Benchmark rates (in %) Current[2] Mar 21F
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] Mar 21F
Crude oil (WTI 12M forward) 18.8   37
Gold 1,687   1,800
Copper (LME) 5,189   6,000

Equity | Cautious, for now

Current[3] Mar 2021F Forecast Total Return (exp.)[4] Dividend yield

United States

(S&P 500)

2,912
 
3,100 8.4% 1.7%

Europe

(Stoxx Europe 600)

340
 
370 12.7% 3.4%

Eurozone

(Euro Stoxx 50)

2,928
 
3,150 11.6% 3.4%

Germany

(DAX)[5]

10,862


 

12,000 10.5% 3.0%

United Kingdom

(FTSE 100)

5,901


 

6,100 9.1% 4.6%

Switzerland

(Swiss Market Index)

9,629


 

10,150 8.7% 3.1%

Japan

(MSCI Japan Index)

886
 
950 9.8% 2.2%

MSCI Emerging Markets Index

(USD)

925
 
1,000 11.2% 2.6%

MSCI AC Asia ex Japan Index

(USD)

610


 

660 10.8% 2.4%
F refers to our forecasts as of 4/29/20

Fixed Income | Yields to stay low, again

Current[2] Mar 2021F

United States

U.S. Treasuries (10-year) 0.64%   0.90%
U.S. municipal bonds[6] 225%   78%
U.S. investment-grade corporates 191 bp   135 bp
U.S. high-yield corporates 744 bp   600 bp
Securitized: mortgage-backed securities[7] 61 bp   55 bp
Europe
German Bunds (10-year) -0.59%   -0.50%
UK Gilts (10-year) 0.23%   0.60%
Euro investment-grade corporates[8] 192 bp   120 bp
Euro high-yield corporates[8] 785 bp   500 bp
Securitized: covered bonds[8] 64 bp   35 bp
Italy (10-year)[8] 235 bp   190 bp
Asia-Pacific
Japanese government bonds (10-year) -0.03%   -0.10%
Asia credit 412 bp   370 bp
Global
Emerging-market sovereigns 605 bp   600 bp
Emerging-market credit 506 bp   500 bp

Currencies

Current[2] Mar 2021F
EUR vs. USD 1.10   1.10
USD vs. JPY 107   105
EUR vs. GBP 0.87   0.90
GBP vs. USD 1.26   1.22
USD vs. CNY 7.06   7.00

F refers to our forecasts as of 4/29/20
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 returnopportunity as well as downside risk.  negative return potential for long-only investors.

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


04/15 - 04/16 04/16 - 04/17 04/17 - 04/18 04/18 - 04/19 04/19 - 04/20
Asia credit 4.3% 4.5% 0.5% 6.6% 3.8%
Dax -12.4% 23.9% 1.4% -2.1% -12.0%
Emerging-market sovereigns 4.3% 8.5% 0.2% 5.2% -3.3%
Emerging-markets credit 2.8% 8.7% 1.8% 6.7% 1.5%
Euro high-yield corporates 0.8% 8.5% 3.5% 2.8% -5.9%
Euro investment-grade corporates 1.2% 2.7% 1.2% 3.0% -0.5%
Euro securitized: covered bonds 0.8% 0.6% 0.2% 2.2% 1.4%
Euro Stoxx 50 -14.0% 20.9% 2.0% 2.1% -14.7%
FTSE 100 -6.8% 20.0% 8.5% 3.1% -17.1%
German Bunds (10-year) 2.7% 0.8% -1.0% 5.3% 4.0%
Italy (10-year) 2.9% -2.3% 6.5% -1.7% 6.4%
Japanese government bonds (10-year) 4.0% -0.5% -0.1% 1.3% 0.2%
MSCI AC Asia ex Japan Index -18.5% 21.1% 24.0% -4.1% -7.4%
MSCI Emerging Market Index -17.9% 19.1% 21.7% -5.0% -12.0%
MSCI Japan Index -6.1% 10.5% 19.2% -7.2% -3.0%
S&P 500 1.2% 17.9% 13.3% 13.5% 0.9%
Stoxx Europe 600 -10.8% 17.2% 2.9% 5.2% -10.2%
Swiss Market Index -9.3% 14.5% 4.3% 13.3% 2.3%
U.S. high-yield corporates -1.1% 13.3% 3.3% 6.7% -4.1%
U.S. investment-grade corporates 2.8% 2.7% 0.6% 6.4% 9.4%
U.S. securitized: mortgage-backed securities 2.6% 0.7% -0.4% 4.9% 7.8%
U.S. Treasuries (10-years) 4.0% -1.3% -2.7% 6.6% 17.4%
UK Gilts (10-years) 4.5% 6.2% -1.6% 4.1% 8.4%

Source: Bloomberg Finance L.P. as of 4/30/20
Past performance is not indicative of future returns. Forecasts are based on assumptions, estimates, opinions and hypothetical models that may prove to be incorrect.

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

2. Source: Bloomberg Finance L.P. as of 4/30/20

3. Sources: Bloomberg Finance L.P., FactSet Research Systems Inc. as of 4/30/20

4. Expected total return includes interest, dividends and capital gains where applicable

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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