Invesco Canada blog

Insights, commentary and investing expertise

Protectionism rears its ugly head again


June 5, 2018
Subject | Invesco | Macro views

The global trade environment seriously worsened last week as the U.S. applied aluminum and steel tariffs to Canada, Mexico and the European Union (EU). Just a few days before, U.S. President Donald Trump announced he is exploring tariffs of up to 25% on imported cars. In my view, this is a very negative development that has implications for the global economy for several different reasons:

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Is Italy headed for an EU exit?


May 30, 2018
Subject | Invesco | Macro views

We have devoted much time in this weekly blog to geopolitical risks. However, I have tried to stress that geopolitical risk, while disruptive, tends not to impact fundamentals – although it can certainly create a lot of turmoil in capital markets in the shorter term. A case in point is the current political situation in Italy, which has worsened over the last few days and thrown into question the country’s future with the European Union (EU).

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What do higher oil prices mean for the stock market?


May 23, 2018
Subject | Commodities | Invesco | Macro views

In the past few weeks, the price of a barrel of oil has risen to its highest level in the last several years, and I believe it is poised to move higher. Lately, I’ve been asked quite a bit about what this means for the stock market. While high oil prices may have an effect on certain sectors and industries, I believe the far greater impact would be indirect – and could happen in several different ways.

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Is the ‘synchronized’ global expansion really in sync?


May 8, 2018
Subject | Institutional | Invesco | Macro views

“Getting long in the tooth” is an interesting way to describe something that is getting old and presumably nearing its end – it refers to the long-time practice of estimating a horse’s age by looking at its mouth. I’ve found myself using this expression a lot these days, as the U.S. experiences its second-longest economic expansion in the last 100 years. But investors should remember that – even as market-watchers talk about “synchronized global growth” – other economies are in much earlier stages of expansion.

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Five takeaways from April and five things to watch in May


May 2, 2018
Subject | Macro views

As April came to a close, we learned some key lessons this month about the likely path forward for central banks, the growing concerns about protectionism, and the market’s sensitivity to any changes in key indicators. Below, I highlight five key takeaways from April, and preview five things to watch in May.

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Yield signs: Deconstructing a key market indicator


April 24, 2018
Subject | Invesco | Macro views

The biggest news of last week was not a tweet, but a Treasury yield – specifically the 10-year U.S. Treasury yield, which rose significantly last week, to 2.95%.1 As of this writing on Monday, the 10-year Treasury was yielding 2.98%, very close to the key 3% level it has not seen in more than four years.1 But what is this key market indicator telling us? And why do people care?

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As U.S.-China trade drama continues, is a risk-off stance warranted?


April 10, 2018
Subject | Invesco | Macro views

Last week saw an acceleration of the protectionist rhetoric between the U.S. and China. The week ended on a down note, with U.S. President Donald Trump tweeting a proposal for another $100 billion in tariffs, swiftly followed by China, despite its important holiday, promising to match the most recent round of tariffs and fight the U.S. “at any cost.” Following China’s threat, Trump admitted that the U.S. may feel some “pain,” while U.S. Treasury Secretary Steven Mnuchin conceded that, though unlikely, “there is the potential of a trade war.”

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Five things to watch in April


April 3, 2018
Subject | Institutional | Invesco | Macro views

The first quarter of the year has ended with major developed market indices down slightly and major emerging market indices up slightly. But those numbers belie a very turbulent period in which stocks were whipsawed. Bonds also experienced gyrations, with the yield on the 10-year U.S. Treasury moving from 2.41% at the start of the quarter to a peak of 2.94% and ending at 2.74%.1 As we begin the second quarter, there are five critical things to watch.

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Tariffs, trade war concerns help spark equity market sell-off


March 27, 2018
Subject | Invesco | Macro views

It seems we are beginning to smell the faint hint of fear in markets. Not only did stocks sell off globally last week, but investors also fled to the safety of U.S. Treasuries, which drove the 10-year Treasury yield down to 2.817% – a level not seen in weeks. Last week’s market rout was the worst week for stocks in two years.

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Revolving headlines lead to a tug of war for stocks


March 20, 2018
Subject | Invesco | Macro views

Across the globe, stocks experienced a tug of war last week, with good news (positive earnings and other signs of accelerating growth) and bad news (concerns that protectionist actions could slow economic growth) influencing the markets. I believe this tug of war will very likely continue going forward, and I’ll be closely watching for more market-moving news this week as new central bank leaders make their debuts.

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Protectionism tightens its grip


March 13, 2018
Subject | Invesco | Macro views

I’ve been warning for some time about the economic dangers of protectionism and the potential for retaliatory policies that could stifle free trade. Last week, this threat intensified – and that was just the tip of the iceberg in a week filled with market-moving news. Below I highlight five critical headlines from last week and preview what’s ahead.

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Four risks to watch in 2018

Our market outlook is positive, but institutional investors need to be ready for disruption

My base case for 2018 is that global growth will be solid and accelerating while global inflation will be low and benign. While I expect central banks around the world to tighten financial conditions, I believe the pace will be slow enough that overall financial conditions should remain accommodative. If my positive expectations for global growth, inflation and financial conditions come to pass, then the environment should be supportive of all risky assets in 2018, including credit and equity. However, we can’t ignore the potential risks to these conditions.

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The dangers of protectionism


March 6, 2018
Subject | Commodities | Invesco | Macro views

Geo-politics is back in the spotlight, with German Chancellor Angela Merkel finally securing a governing coalition after nearly six months of uncertainty, while Italy embarks on its own period of uncertainty, given the inconclusive results of its election this past weekend. Italy’s voters are following in the recent footsteps of voters in the United Kingdom, the United States, Germany and elsewhere – questioning the “status quo.”

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Five upcoming events that could drive markets


February 27, 2018
Subject | Invesco | Macro views

Markets took another roller coaster ride last week. The yield on the 10-year U.S. Treasury bond rose to 2.95% – a level it hasn’t seen in four years – but then moved lower by the end of the week.1 Stocks also vacillated, largely in response to those Treasury yield movements. It appears that markets are unsettled and primed to react to the news of the day – both negatively and positively. Below, I discuss five upcoming events that could possibly be the catalyst for more moves ahead.

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Good news is bad news: Deconstructing the market sell-off


February 13, 2018
Subject | Institutional | Invesco | Macro views

Stocks globally have experienced more than a week of tumultuous trading, with the U.S. stock market officially in correction territory. And after being relatively sedate for years, the VIX Index has risen dramatically in recent days, indicating rising volatility. Stocks have moved so far so fast that investors have experienced financial whiplash and are trying to understand what caused markets to change course so abruptly. To put it simply, almost everything that should be a positive for stocks is now a negative for stocks.

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Lessons from the stock market sell-off


February 5, 2018
Subject | Invesco | Macro views

Last week ended on a bad note. The yield on the 10-year Treasury moved up from 2.695% to 2.852% in just five days,1 spiking on the release of the U.S. employment situation report for the month of January. Not only did yields globally then rise, but this brought on the biggest sell-off in U.S. stocks in nearly two years – which then spread to Europe and Asia, putting downward pressure on equities in those regions. As I write this, futures suggest an extension of the sell-off today.

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