Our medium-term baseline scenario is that of a late business cycle slowdown supported by the dovish U-turn of central banks.

We expect economic growth to evolve around potential for most developed economies in 2020. It could subsequently decrease below potential in 2021 driven by a deteriorating cyclical environment and still anaemic global trade. Nevertheless, growth should stay in positive territory. 

In the developed economies, central banks are expected to cut their policy rates to mitigate the economic slowdown. The ECB is expected to move back to an unconventional monetary policy. In that context, short-term rates are likely to initially decline, yield curves steepen, spreads widen moderately, mostly on low ratings, and default rates rise from current levels for the HY sector.

For further details, please refer to Asset Class Return Forecasts (Q2 2019) available at  Asset-Class-Views-Medium-and-long-term-expected-returns .