If investors wanted a quiet summer period, they didn’t get it. The third quarter saw no resolutions to the many risks weighing on the markets and introduced a few new ones. To the US-China trade war, global recession fears and Brexit we can add yield curve inversion, Hong Kong protests, a higher risk premium on oil as a result of Saudi production facility attacks and the threat of impeachment of the US president.
For now, the economy is bending, not breaking. In this environment we suggest portfolios are tilted towards safety but remain exposed to risk assets. That means a quality bias in equities, favouring US government bonds for protection in market sell-offs and being more selective on tenant exposure within real estate. As we enter the fourth quarter, there’s plenty in the calendar to keep markets anything but quiet.
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10/15/2019
Fidelity International
Fidelity Investment Outlook Q4 2019 - Bending, not breaking
