Rising geopolitical uncertainty and poor policy responses to financial pressures, particularly in Turkey and Argentina, caused wild gyrations in credit, FX and rates amidst continued outflows from the asset class for most of the quarter.
However, we believe that various factors bode well for Q4 2018:
- Global growth has stabilized above trend, compliments of the US
- China is likely to show better activity numbers on expansionary policies, and trade news are likely to be mild in the remainder of the year
- Geopolitics and demand from China supports commodity prices