Invesco Canada blog

Insights, commentary and investing expertise

Trade remains the top concern for global markets


September 11, 2018
Subject | Invesco | Macro views

Every week I hope that there are no new trade developments, so that for at least one week I can spare you all from a trade discussion in this blog. Unfortunately, this is not that week – there were many trade developments over the past few days, and I feel compelled to discuss them because I firmly believe the trade situation poses a significant risk to the economy and markets.

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When numbers aren’t enough


September 10, 2018
Subject | Industry views | Institutional | Invesco | Macro views

ESG investors must demand more than headlines from their asset managers 

Ever since the United Nations-supported Principles for Responsible Investment (UNPRI) introduced the term ESG integration back in 2006, the investment industry has sought to make it easier to identify which companies are addressing environmental, social and governance issues and which ones aren’t hitting the mark. That search has led to a proliferation of assessment tools that purport to add clarity for asset owners but instead have reduced the ESG engagement process to box-ticking. It’s an exercise that doesn’t generate any meaningful insights for investors looking to do the right thing.

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Reading the tea leaves from the central banks


August 28, 2018
Subject | Invesco | Macro views

What did we learn last week from the central banks, trade talks and the markets?

Last week gave us a look into the thoughts of the U.S. Federal Reserve (Fed) as Fed Chair Jay Powell gave a widely anticipated speech, and the Federal Open Market Committee (FOMC) released the minutes from its most recent meeting. Some of the messages were clear, while other statements required observers to read between the lines. Below are five key takeaways from last week, and five items I’m watching going forward:

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Factor Investing: The Third Pillar of Portfolio Construction

Even though it’s been around since the 1950s, factor investing is only just now gaining a toehold in the portfolios of some of Canada’s most sophisticated pension portfolios. As that happens, plan sponsors can gain a new window into asset allocation to better understand how their portfolios work in different market conditions.

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What currency pressures in Turkey and other countries may mean for investors


August 14, 2018
Subject | Institutional | Invesco | Macro views

Activity in currency markets has more than tripled in the last two decades. Between 2001 and 2016, global turnover in currency markets rose from $1.2 trillion to $5.1 trillion,1 and the geopolitical disruption of the last two years has increased currency activity even further. Last week brought several significant examples of this trend in the U.K., China, Iran and – most dramatically – Turkey. Is this a sign of more disruption to come?

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Is it time to worry about a liquidity crisis?


July 31, 2018
Subject | Invesco | Macro views

One of the key risks to markets that I’ve been discussing for more than a year is balance sheet normalization. I have argued — and continue to argue — that quantitative easing was a big experiment, and so unwinding it is an experiment in and of itself. Now that balance sheet normalization has been in force for more than half a year, we are seeing its effects. And one key effect is on liquidity.

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Trade wars: A worldwide web of worry


July 24, 2018
Subject | Invesco | Macro views

Global stocks have been in positive territory thus far in July with even emerging markets stocks eking out a tiny gain.1 With positive returns and relatively low volatility in July, it appears that the stock market is not worried about the burgeoning trade war. Admittedly, it’s easy to ignore since investors don’t have a frame of reference for the impact of a major trade war – and so far, earnings season has been very good. But other markets may be telling us that we should be worried.

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Five risks that could affect fixed income markets


July 12, 2018
Subject | Invesco | Macro views

Invesco Fixed Income is positive on fundamentals for the rest of this year. Global growth is solid and inflation is tame. As central banks have pivoted away from stimulus, tighter financial conditions have hurt risky assets. But major central bank policies are still generally easy – we expect the Federal Reserve to tighten gradually, and the runway for other central banks to normalize policy is still long. Nevertheless, political uncertainty, trade tensions and a sell-off in emerging markets have challenged investors in recent months. We expect these factors to generate further volatility and believe caution is warranted. However, we believe greater volatility will generate new opportunities for fixed income investors against a backdrop of solid macro and credit fundamentals. Below are five risks we are monitoring.

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Six issues driving global markets


July 10, 2018
Subject | Institutional | Invesco

As I write this, early on July 9, global stocks have hit a two-week high1 and the price of copper is rallying. Markets are clearly focusing on positive data at the moment, which is a welcome change. Below, I highlight six important things that happened last week – both positive and negative – and several upcoming issues to watch.

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Interest rate outlook: U.S. inflation should peak this summer


July 6, 2018
Subject | Invesco | Macro views

U.S. growth remains strong, accelerating in the second quarter versus the first quarter’s lackluster 2.2% performance.1 We expect 2018 growth of around 2.8%, with strong contributions from capital expenditures and consumption. Core inflation continues to be benign, and we see it peaking in the next two months at around 2.2%. After that, softer rental and service costs should drive it back below 2%. In our view, the U.S. Federal Reserve will hike one more time this year before pausing in response to declining inflation. Strong growth and lower-than-expected inflation point to a 10-year Treasury yield of around 3%. However, supply dynamics will likely begin to shift in the third quarter as the Treasury begins to issue more long-term debt. This may pressure the Treasury yield curve steeper.

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Six ways the trade situation deteriorated in the past week


July 3, 2018
Subject | Invesco | Macro views

I keep promising myself that I will stop writing about trade and protectionism in my weekly commentaries. And then virtually every week, something happens that forces me to address the topic once again. This past week, unfortunately, was no exception. In my mid-year outlook, I mentioned that my outlook is predicated on the trade situation not worsening materially – so it’s important that we closely follow trade developments. Last week, there were six trade developments that are helping to place downward pressure on stocks:

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