Invesco Canada blog

Insights, commentary and investing expertise

When geopolitical tension creates opportunities


March 19, 2018
Subject | Active management | Macro views | Trimark

Whether it’s nuclear tensions on the Korean peninsula, revolution in the Ukraine, the Brexit vote in the U.K. or an unpredictable legislative agenda from the Trump administration, there is no shortage of geopolitical issues for investors to consider. However, for us as long-term investors, the question is: When do these stresses create buying opportunities?

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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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Above-trend growth could cause U.S. inflation later in 2018

Employment growth has been strong enough that the Bank of Canada (BOC) hiked its overnight target rate to 1.25% in January.1 The BOC statement attempted to balance the view that growth was near capacity with concerns that raising rates too quickly could cause the economic expansion to stall. The 10-year yield has broken through its previous peak of 2.15% on the growth story and a modest pickup in inflation.2 We believe yields should continue to move higher from these levels.

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What does market volatility mean for fixed income?

Market expectations of inflation have risen in recent days, after signs of wage growth – often seen as a harbinger of inflation – appeared in the January jobs report. We at Invesco Fixed Income believe investor concerns that inflation is finally showing signs of life have helped drive interest rates higher and impacted credit markets, where worries over higher interest rates (and their potential impact on companies) have caused declines in stock markets and other risky assets.1

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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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Is the world shifting from connection to economic protection?


January 30, 2018
Subject | Institutional | Invesco | Macro views

Last week offered some stark reminders that we live in a very global and interconnected world. Given how interwoven our international relationships have become, the current trend toward de-globalization carries with it many consequences — and protectionism could become the biggest economic risk of them all.

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Disruption abounds, but will it matter to the markets?


January 23, 2018
Subject | Invesco | Macro views

For the past year, I’ve been talking about disruption as a key theme for the markets and economy. During the past week – with the shutdown of the U.S. government, continued efforts to form a coalition in Germany, and an Olympic agreement coming out of the Korean peninsula – it’s become clear that the theme of disruption remains front and center. Particularly geopolitical disruption.

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BoC hikes again, citing near-capacity growth

The Bank of Canada (BoC) announced today it was raising the target overnight rate by 0.25% to 1.25%. The last time the BoC hiked its target rate was at the September 6 meeting. Market expectations for this rate hike began to increase several weeks ago, so it was almost fully priced into the market.

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Getting a read on the Goldilocks economy


January 9, 2018
Subject | Institutional | Invesco | Macro views

Last week saw the release of the latest U.S. employment report, with just 148,000 nonfarm payrolls created in December.1 This was significantly below expectations and the previous month’s reading. However, it may have been a Goldilocks jobs report: It is good enough to stave off any concerns that the economy may be weakening, but it’s not strong enough to suggest that the economy is overheating.

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Ten expectations for 2018


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

Last year was a strong one for capital markets. Most countries’ stock markets posted positive returns, with many markets, including the U.S., posting double-digit gains. Globally, and in the U.S., the best-performing sector was technology. Energy was the worst-performing sector globally – and was one of the worst-performing sectors in the U.S.1

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Who’ll be watching the punch bowl in 2018?


December 19, 2017
Subject | Institutional | Invesco | Macro views | Trimark

Last week saw a confluence of central bank meetings and decisions over the course of two days. They revealed central banks that are in the process of – or on the verge of – tightening. I was reminded of former Federal Reserve (Fed) Chair William McChesney Martin, who said the central task of his job was “to take away the punch bowl just when the party gets going.” But is the party really just getting going – or is it getting long in the tooth? And, most importantly, who is the chaperone? And how strict are they?

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