The global economy is showing signs of synchronized slowing. The imposition of tariffs by the U.S. and China are a headwind to global growth, but stimulative measures in China and an easing of monetary policies should act as a support.
The recent market turmoil caused by heightened trade tensions and fears of a monetary policy mistake has pushed interest rates to multi-year lows. The flow from equities to bonds looks largely overdone. We recommend going back to a slightly overweight position on equities and an underweight position on bonds in the medium term.
However, trade tensions created by the Trump administration remain the main risk for the financial markets as well as for the continuation of the business cycle.