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LGT Beacon: The case for a sustained bull market

July 19, 2019

A dovish monetary policy shift outweighed concerns about slowing economic growth and the so-called trade war, fueling the strongest first half-year US equity rally since 1997. The short-term upside thus looks rather limited, amid a relatively weak earnings season. In the medium term, a successful soft landing of the US economy should sustain further gains.

This year's first half was exceptionally strong for risk asset markets. US equities outperformed all other markets, reaching historic highs, while our defensively-tiled sustainable quality strategy surged even more, and was much less volatile.

Credit spreads tightened as interest rates generally slumped, with euro area sliding to new lows in negative territory (e.g. in Germany and France, graph 2). About one fifth of the world's outstanding government bonds, or about 12.5 trillion US dollars (USD), now guarantee negative returns if held to maturity.

 

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Note: The next edition of the LGT Beacon is scheduled for August 2019.