We stick to the view that 2018 will be the peak of the global economic cycle. 2019 will most likely be a year of deceleration albeit with still above trend growth, before a further slowdown of growth towards potential in 2020. Central banks will continue withdrawing their stimulus but at different speeds due to growing economic divergences among developed countries. With elevated and persistent uncertainties, the downside risks to our scenario have increased. Liquidity tightening as well as the dominance of politics are key factors to consider as we move towards 2019 and beyond.

As we move away from a market driven by strong and predictable liquidity to a market driven by economic and corporate fundamentals, we expect lower returns on risky assets as economic and profit growth is peaking. We now anticipate a more gradual hiking cycle by the ECB. On the other hand, the sell-off in global rates which put upward pressure on bond yields provided slightly more attractive entry points on the government bonds.